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MAS held an in-house competition for the design of our 40th Anniversary logo. The winning design concept came from Spencer Hsu.

“Sustaining Stability. Serving Singapore” articulates our mission of promoting low inflation and a resilient financial services sector, serving the needs of Singapore and its people.

The number ‘4’ and the gold coin in the MAS logo form the number ‘40’.

The four billowing streamers represent MAS’ core values: Integrity, Enterprise, Commitment and Teamwork. The upward direction of the streamers reflects our collective aspiration to take MAS to greater heights in the years to come. W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

MAS is the central bank of Singapore. Our mission is to promote sustained non- inflationary economic growth, and a sound and progressive financial centre.

MAS’ FUNCTIONS

• To act as the central bank of Singapore, including the conduct of monetary policy, the issuance of currency, the oversight of payment systems and serving as banker to and financial agent of the Government;

• To conduct integrated supervision of financial services and financial stability surveillance;

• To manage the official foreign reserves of Singapore; and

• To develop Singapore as an international financial centre. W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

CONTENTS

Tribute to ESM Goh 07 Insurance Resolution and Policy Chairman’s Message 08 Owners’ Protection 28 Board of Directors 10 Review of Insurance Act 29 Management Team 12 Enhancing Safeguards for Retail Customers 29 Board Committees 14 Enhancing Regulatory Regime for Fund Management Companies 30 Organisational Structure 15 Achieving Fair Dealing Outcomes 30 Enhancing Corporate Governance Standards 31 Conclusion of First Two Civil Penalty Cases 31 Box 3: The Representative Notification OUR WORK Framework 32 Staying Resilient, Sustaining Growth Enhancing Market Conduct 33

THE GLOBAL RECOVERY IS Audit Assurance 33 CONSOLIDATING 18 Modest Growth in the G3 amidst SINGAPORE AS AN INTERNATIONAL Uncertainties 18 FINANCIAL CENTRE 33 Strong Growth in Asia ex-Japan was Financial Sector Growth 33 Underpinned by the Private Sector 19 Promoting Partnership Framework and Downside Risks in Financial Markets Enhancing Infrastructure 34 have Increased 19 Promoting Partnership Frameworks 34 Higher Energy Costs Push Up Inflationary Trading and Clearing Infrastructure 34 Pressures 20 Box 4 : Private Banking Industry - Code Singapore: Record Growth in 2010 20 of Conduct 35 Consumer Prices and Wages Remain Infrastructure for Long Term Growth 35 Elevated 21 Raising Standards and Building Competencies 36 MONETARY POLICY 22 Deepening Competencies in Banking 36 Box 1: The MAS Core Inflation Measure Building Research Capabilities 36 for Singapore 24

CURRENCY AND PAYMENT SYSTEM 36 LIQUIDITY MANAGEMENT 26 MEPS+ 36 Enhancing the Standing Facility 26 Managing Dollars and Cents 36 Enhancing the Repo Facility 26 PBC-MAS Bilateral Swap Facility 26 Box 2: Issuance of short term MAS bills 27 OUR PARTNERS ENSURING SAFETY AND SOUNDNESS Valuing Partnerships, Building Cooperation OF FINANCIAL INSTITUTIONS AND FINANCIAL SYSTEM 27 ENHANCING STRATEGIC PARTNERSHIPS IN Prudential Supervision and Surveillance 27 AN EVOLVING FINANCIAL LANDSCAPE 40 Fostering a Sound and Reputable Financial Enhancing Global Financial Stability and Centre 27 Regulatory Reform 40 Property Market Measures 28 Facilitating International Financial Review of Deposit Insurance Scheme Discussions 41 in Singapore 28

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CONTENTS

Deepening International Cooperation 41 FOSTERING CLOSER TIES 53 Strengthening Capital Markets Development Closer ties within MAS 53 and Regional Surveillance 42 Family Day 2011 53 Pursuing Closer Bilateral Engagements 43 Hobby Groups 53 Strengthening Cooperation with Healthy Lifestyle 53 Industry Partners 43 Closer ties with counterparts 54 Enhancing Payment Card Security 43 Inter-Central Bank Games 2010 54 Financial District Security Programme (FDSP) 44 Closer ties with community 54 Addition of Primary Dealer 44 Charity Initiatives 54 Partnership with Academia 44 Financial Conferences and Events 45 Box 5: MoneySENSE – Continued FINANCIAL STATEMENTS 58 Efforts to Bring Financial Education to the Community 45 KEY ECONOMIC AND FINANCIAL STATISTICS 88 STATISTICAL ANNEX 92 OUR PEOPLE GLOSSARY 112 Growing Expertise, Grooming Leaders

BUILDING HIGH PERFORMANCE TEAMS AND A STRONG MAS FAMILY 50 Expertise Development 50 MAS Academy 50 Attachment 50 Leadership Development 51 Young Professionals Programme 51 People Leadership Programme 51 Leadership Community Retreat 51 Coaching 51 Box 6 : Honing Specialist Knowledge - The Inaugural Trainer and Peer Group Awards 51 Engaging Staff 52 MAS Staff Seminar 2011 52 Recognising Our People 52 Service Appreciation Awards 52 National Day Awards 52 Risk Management and Infrastructure 52 Business Continuity Management (BCM) 52 Enterprise Risk Management 53

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MASMAS ThanksThanks EmeritusEmeritus SeniorSenior MinisterMinister GohGoh ChokChok TongTong

MrMr Goh Goh Chok Chok Tong, Tong, Emeritus Emeritus Senior Senior Minister, Minister, the successfulComprehensive signing Economic of the Comprehensive Co-operation waswas appointed appointed Chairman Chairman of of the the MAS MAS Board Board of of EconomicAgreement Co-operation (CECA). His cultivation Agreement of Singapore's(CECA). His DirectorsDirectors on on 20 20 August August 2004. 2004. He He was was the the fifth fifth cultivationbilateral relationship of Singapore's with bilateral China relationshipresulted in ChairmanChairman since since the the establishment establishment of of MAS MAS in in 1971. 1971. withimportant China milestones, resulted inincluding important the approvalmilestones of duringMAS as hisa Qualified term as ForeignChairman, Institutional including Investor the AsAs Chairman, Chairman, MrMr GohGoh played an importantimportant role role in approval(QFII) to invest of MASin China’s as ainterbank Qualified market, Foreign the inseveral several key key initiatives initiatives that that strengthened strengthened the MAS' MAS' Institutionalestablishment Investor of a China-Singapore (QFII) to invest in currency China’s capabilitiescapabilities and and enabled enabled it itto to fulfill fulfill its its missionmission and and interbankswap arrangement market, and of CNY150the establishment billion for ofthe a functions.functions. He He providedprovided leadership andand guidance guidance to China-Singaporepurpose of promoting currency bilateral swap trade arrangement and direct tostrengthen strengthen MAS’ MAS’ economic economic and andmonetary monetary policy ofinvestment, CNY150 billion and in-principle for the purpose agreement of promoting for the policyanalysis, analysis, financial financial supervision, supervision, surveillance surveillance and bilateralestablishment trade of and a Renminbi direct investment.clearing bank His in andrisk riskmanagement. management. His emphasis His emphasis on the onbroader the foresightSingapore. in Hisengaging foresight the in Middleengaging East the created Middle broaderand longer-term and longer-term perspective perspective to MAS’ to policies MAS’ opportunitiesEast created opportunities for stronger regionalfor stronger cooperation regional policieswas particularly was particularly valuable. valuable.During the He recent oversaw global andcooperation paved the and way paved for the the further way for development the further thefinancial efforts crisis,of the heMAS oversaw Board the and efforts management of the MAS ofdevelopment Islamic finance of Islamic in Singapore. finance in Singapore. teamBoard to andsteer management Singapore successfully team to steer through Singapore the recentsuccessfully global financialthrough the crisis. challenges. Mr Goh stepped down as Chairman on 20 May 2011, butbut continues continues to to contribute contribute to theto MAS MAS asas MrMr Goh Goh was has instrumental also been in strengthening instrumental MAS’ in Senior Advisor. The MAS Board, Management linksstrengthening with its international our partnerships partners, with especially international in and Staff thank Mr Goh for his years of leadership China,counterparts, India and includingthe Middle China, East. His India leadership and the as ChairmanChairman of ofMAS, MAS, and and welcome welcome Deputy Deputy Prime inMiddle fostering East. closer His economicleadership ties in fostering with India closer laid MinisterPrime Minister Tharman Tharman Shanmugaratnam Shanmugaratnam as theas theeconomic groundwork ties with for Indiathe successfullaid the groundwork signing offor newly-appointedthe newly-appointed Chairman Chairman of MAS. of MAS.

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Chairman's Message

Global economic growth recovered in 2010. Asia risks – both to global economic growth and led the pick-up, driven by robust intra-regional financial stability. Geopolitical tensions in the trade and strong demand in domestic markets. Middle East/North Africa region pose continuing The Singapore economy saw a pronounced uncertainties. Asia is facing rising inflation, upswing, growing by 14.5%, following its caused primarily by higher oil, food and other contraction in 2009. commodity prices but also tighter labour markets. MAS will remain vigilant against this range of Headline inflation rose to 2.8% last year, up potential vulnerabilities. from 0.6% in 2009. The surge in global food and oil prices contributed to higher local costs. We face a changed financial landscape globally Domestically too, strong economic growth and a following the crisis of 2008-2009. Our regulatory tightening labour market exerted upward pressure approaches in Singapore will evolve, whilst on business costs, which were in turn passed retaining the close monitoring and supervision of on as higher prices to consumers. A significant financial institutions that ensures that our financial contributor to domestic inflation, however, was system remains resilient and stable. the sharp rise in car prices, reflecting both the firmness in purchasing power and cuts in the MAS has been an active contributor in the ongoing supply of Certificates of Entitlements (COEs) for car discussions on regulatory reforms at various purchases. MAS Core Inflation, which excludes the international fora that aim at promoting long term cost of private road transport and accommodation, global financial stability. These include the G20, was more moderate at 1.5% in 2010. Financial Stability Board, Basel Committee on Banking Supervision, Committee on Payment and MAS moved pre-emptively to tighten monetary Settlement Systems, International Association of policy as the economy strengthened. We shifted Insurance Supervisors, International Organisation to a modest and gradual appreciation of the of Securities Commissions and Financial Action exchange rate policy band in April 2010. Further Task Force. tightening was undertaken in October 2010 and April 2011 as growth became more entrenched In banking, MAS welcomes the Basel III capital and resource constraints more binding. The tighter reforms. The higher requirements for quality monetary policy stance will ensure price stability and quantity of capital and other enhancements over the medium term and keep growth on a will strengthen the resilience of banks and sustainable path. contribute toward banking sector stability. MAS will require Singapore-incorporated banks to For 2011, the underlying drivers of economic meet Basel III earlier than the Basel Committee’s growth are expected to remain intact. However, schedule, and at a higher standard. the global expansion is moderating, and major vulnerabilities persist. The ongoing sovereign debt In the capital markets, we implemented several crisis in the European periphery poses significant safeguards for investors. MAS issued guidelines

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on the form and content of the Product Highlights The MAS Board of Directors has seen important Sheet, a plain language summary of the key risks recent changes. Mr Goh Chok Tong has stepped and features of an investment product. We also down as Chairman of the MAS Board, after seven enhanced investment guidelines by introducing years of distinguished service. MAS owes Mr Goh a list of permissible investments for collective a lasting debt for his leadership during a most investment schemes, among other measures, and challenging and eventful period. standardised the calculation of performance fees. Mr Koh Yong Guan stepped down from the In line with the global move to regulate credit rating Board on 31 March 2011. Mr Koh had served on agencies, MAS engaged in public consultation the Board since 1 June 1997. I thank him for his on a proposed regulatory framework aimed at long-standing contributions to MAS, including two promoting the quality and integrity of the ratings periods as Managing Director. process and strengthening the independence of credit rating agencies. MAS will also implement Mr Heng Swee Keat stepped down as Managing changes to fund management regulation, aimed Director of MAS on 2 April 2011. On behalf of the at raising the quality of players and enhancing MAS Board, I thank him for his strong and effective regulatory oversight to enable sustained growth contributions as Managing Director since 1 June of the industry. 2005. Mr Heng continues to serve as a Director on the MAS Board. The Government guarantee on non-bank deposits in banks, merchant banks and finance companies I welcome two new Directors to the Board: Mr licensed by the MAS expired on 31 December Sundaresh Menon who joined on 1 November 2010 without being triggered. The guarantee was 2010 and Mr Ravi Menon, who took over from Mr put in place in October 2008 as an extraordinary Heng as Managing Director on 2 April 2011. measure, in response to blanket guarantees by other jurisdictions in the region, even though Finally, on the occasion of the 40th anniversary Singapore's financial system remained sound of MAS, I would like to offer my heartiest in the midst of the global financial crisis. In May congratulations to its staff. The practice of central this year, the Deposit Insurance Scheme was banking and financial sector oversight at MAS, to enhanced. The maximum level of coverage was which staff past and present have contributed, has raised from S$20,000 to S$50,000 per depositor, brought major benefit to Singapore in a vibrant and coverage expanded to include all non-bank financial services industry and high quality jobs depositors. The Policy Owner’s Protection Scheme for Singaporeans. I would also like to thank all was made a pre-funded scheme and enhanced to financial industry players and our other partners cover accident and health policies of life insurers. for working alongside MAS in growing Singapore into a dynamic and well-respected international Singapore’s financial centre has continued financial centre. to grow in prominence. As a whole, financial services expanded by 12% in 2010. Robust trade and capital flows, strong growth in Asian corporate activity, and increasing wealth accumulation in Asia have driven the demand for financial services. MAS will continue to support Tharman Shanmugaratnam the development of Singapore as an international Chairman financial centre trusted for its high standards of regulation, integrity and efficiency.

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Board of Directors1

Tharman Shanmugaratnam Lim Hng Kiang Chairman Deputy Chairman (Appointed 21 May 2011) Minister for Trade & Industry Deputy Prime Minister; Minister for Finance; Minister for Manpower

Heng Swee Keat2 Teo Ming Kian Lim Chee Onn Minister for Education Chairman of Audit Committee Chairman of Risk Committee Permanent Secretary (National Senior Advisor, Keppel Research and Development), Corporation Limited; Prime Minister's Office; Chairman, Singbridge Advisor (Special Projects), International Singapore Ltd Ministry of Finance

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Board of Directors1

Lucien Wong Yuen Kuai Peter Ong Boon Kwee Managing Partner, Permanent Secretary, Allen & Gledhill Ministry of Finance

Sundaresh Menon3 Ravi Menon4 Attorney-General of Singapore Managing Director, MAS

1 As at 1 June 2011 2 Mr Heng Swee Keat, Minister for Education, served as Managing Director of MAS from 1 June 2005 to 1 April 2011. 3 Mr Sundaresh Menon was appointed to the Board on 1 November 2010. 4 Mr Ravi Menon was appointed Managing Director of MAS on 2 April 2011. Note : Mr Koh Yong Guan (not shown above) served as a member of the Board from 1 June 2005 till 31 March 2011.

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Management Team

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Management Team

A. Ravi Menon G. Lee Chuan Teck Managing Director Assistant Managing Director Markets & Investment

B. Ong Chong Tee Deputy Managing Director H. Leo Mun Wai Monetary Policy, Investment / Assistant Managing Director Development & External Capital Markets

C. Teo Swee Lian I. Jacqueline Loh Deputy Managing Director Assistant Managing Director Financial Supervision Finance, Information Technology & Risk Management

D. Foo-Yap Siew Hong Assistant Managing Director J. Ng Nam Sin Currency, Corporate Services & Assistant Managing Director Human Resource / Development Special Projects Advisor to MD

K. Edward Robinson E. Andrew Khoo Assistant Managing Director Assistant Managing Director Economic Policy Policy, Risk & Surveillance / MAS Academy

F. Lee Boon Ngiap Assistant Managing Director Banking & Insurance

B A K I C G E J H F D

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Board Committees*

The MAS Act provides that the Board of Directors shall be responsible for the policy and general administration of the affairs and business of MAS. The Board is assisted by the following committees:

CHAIRMAN’S MEETING The Chairman’s Meeting approves major changes to MAS’ supervisory policies and regulatory framework. It also approves major changes to policies and strategies relating to financial centre development and international and regional relations. The Chairman’s Meeting comprises Tharman Shanmugaratnam (Chairman), Lim Hng Kiang, Teo Ming Kian and Ravi Menon.

MONETARY AND INVESTMENT POLICY MEETING The Monetary and Investment Policy Meeting deliberates and decides on issues relating to the formulation and implementation of monetary policy with the objective of maintaining price stability for sustainable economic growth. The Meeting also oversees the investment of MAS’ reserves. The Monetary and Investment Policy Meeting comprises Tharman Shanmugaratnam (Chairman), Lim Hng Kiang, Teo Ming Kian and Ravi Menon.

AUDIT COMMITTEE The Audit Committee provides an independent assessment of MAS’ internal controls and financial reporting process. The Committee also reviews the efforts of MAS’ internal and external auditors. The Audit Committee comprises Teo Ming Kian (Chairman), Lucien Wong and Peter Ong.

RISK COMMITTEE The Risk Committee provides oversight and guidance on the management of risks faced by MAS. The Committee oversees the MAS-wide risk management framework, and reviews MAS’ risk management policies and the processes for reporting of risks. The Risk Committee comprises Lim Chee Onn (Chairman), Sundaresh Menon and Ravi Menon.

* As at 1 June 2011

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Organisational Structure*

Ravi Menon FINANCIAL SUPERVISION HUMAN RESOURCE Managing Director Teo Swee Lian Ho Hern Shin Executive Director Deputy Managing Director HUMAN RESOURCE PROJECTS Ong Chong Tee BANKING & INSURANCE Winnifred Chen Executive Director Deputy Managing Director Lee Boon Ngiap Monetary Policy, Investment / Assistant Managing Director Development & External COMPLEX INSTITUTIONS Low Kwok Mun Executive Director FINANCE, INFORMATION Teo Swee Lian TECHNOLOGY & Deputy Managing Director BANKING RISK MANAGEMENT Chua Kim Leng Executive Director Financial Supervision Jacqueline Loh INSURANCE Assistant Managing Director Luz Foo Executive Director FINANCE Teo Kok Ming Executive Director MONETARY POLICY, CAPITAL MARKETS INVESTMENT / Leo Mun Wai INFORMATION TECHNOLOGY Assistant Managing Director Lawrence Ang Executive Director DEVELOPMENT & EXTERNAL CAPITAL MARKETS RISK MANAGEMENT Ong Chong Tee INTERMEDIARIES Deputy Managing Director Lim Tuang Lee Executive Director Lam San Ling Executive Director ECONOMIC POLICY INVESTMENT INTERMEDIARIES Edward Robinson Merlyn Ee Director Assistant Managing Director CAPITAL MARKETS MANAGING DIRECTOR’S Economic Surveillance & Loo Siew Yee Executive Director OFFICE Forecasting Celine Sia Executive Director POLICY, RISK & SURVEILLANCE SPECIAL PROJECTS ADVISOR TO MD ECONOMIC ANALYSIS Andrew Khoo Ng Bok Eng Executive Director Assistant Managing Director Foo-Yap Siew Hong Assistant Managing Director SPECIALIST RISK GENERAL COUNSEL’S OFFICE MARKETS & INVESTMENT Wan Aik Chye Director Lee Chuan Teck Ng Heng Fatt General Counsel PRUDENTIAL POLICY Assistant Managing Director MAS ACADEMY Adrian Chua Executive Director RESERVE MANAGEMENT Andrew Khoo Assistant Managing Yap Chuin Houi Executive Director MACROECONOMIC SURVEILLANCE Director Wong Nai Seng Executive Director MONETARY & DOMESTIC EXTERNAL MARKETS MANAGEMENT Leong Sing Chiong Executive Luke Goh Executive Director Director

DEVELOPMENT CURRENCY, CORPORATE Ng Nam Sin Assistant Managing Director SERVICES & HUMAN RESOURCES INTERNAL AUDIT FINANCIAL MARKETS STRATEGY Foo-Yap Siew Hong Timothy Ng Executive Director Ng Nam Sin Assistant Managing Director Assistant Managing Director FINANCIAL CENTRE DEVELOPMENT Ng Nam Sin Assistant Managing Director CORPORATE SERVICES SPECIAL PROJECTS Bernard Yeo Executive Director Tai Boon Leong Executive Director CURRENCY Ho Kwen Chan Executive Director

* As at 1 June 2011

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OUR WORK W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

OUR STAYING RESILIENT WORK SUSTAINING GROWTH W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

OUR WORK Staying Resilient, Sustaining Growth

THE GLOBAL RECOVERY (MENA) region since February 2011 and the IS CONSOLIDATING Japanese earthquake in March, introduced new uncertainties to the economic outlook. Following the exit from the worst recession in post-war history, global economic growth accelerated in 2010. World GDP grew by 5.8% Modest Growth in the G3 after contracting by 0.4% in the previous year, amidst Uncertainties as expansionary fiscal and monetary policies, and a revival of consumer and business In the US, GDP advanced by 2.9% in 2010 confidence, stimulated aggregate demand as private consumption spending received a in the early part of the year. Nevertheless, the fillip from government transfers and tax cuts. solid overall performance in 2010 masked a Business fixed investment also rose, stimulated divergence in regional growth patterns, with by policy incentives to increase hiring and capital the G3 economies expanding by 2.6% and Asia spending, although residential investment has ex-Japan at a much faster 8.1%. remained in the doldrums due to the weak housing market. More recently, the improvement The sharp rebound in Asia ex-Japan was in labour market conditions has become more underpinned by strong household and corporate discernable. With monthly employment increasing balance sheets, which boosted domestic by an average of 166,000 in the first three months demand. The cyclical upswing in the global of 2011, nominal income growth has been quite electronics industry and the exceptional pump- robust. However, higher oil prices over the same priming measures adopted by China further period have crimped consumer expenditures, supported economic activity in the region and causing the US economy to expand by just 1.9% expedited the recovery from the recession. In in Q1 2011 on a quarter-on-quarter seasonally contrast, the Greek sovereign debt crisis in May adjusted annualised basis (q-o-q SAAR). and concomitant fiscal consolidation dampened economic momentum in the Eurozone, whilst The sovereign debt crisis in the Eurozone has GDP growth in the US faltered in the middle of not receded. In the year to May 2011, three the year as the inventory restocking cycle came rescue packages jointly funded by the European to an end. Commission (EC) and the International Monetary Fund (IMF) were put together for Greece, Ireland Towards the end of last year, the global economy and Portugal, accompanied by fiscal austerity picked up again owing to firmer private demand, measures to narrow their budget deficits. Despite notwithstanding a gradual withdrawal of the an expansion in the effective financing capacity stimulus from government spending. Even of the European Stability Mechanism to €500 so, the attendant rise in oil prices, aggravated billion, bond yields for the peripheral Eurozone by the unrest in the Middle East/North Africa countries remain on the rise and the threat of

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debt restructuring continues to hang over the However, private demand in the smaller and more Eurozone. Nonetheless, fiscal and banking trade-oriented economies also picked up, as the problems have thus far been confined to the effects of the export boom and higher commodity peripheral economies while those in the core have prices trickled down to households and spurred continued to benefit from a weaker euro which domestic consumption. has led to stronger manufactured exports. Overall economic sentiment in the core countries of the region remains quite strong, and the Eurozone as Downside Risks in Financial Markets a whole grew by 3.4% q-o-q SAAR in Q1 2011. have Increased

Japan’s GDP expanded by 4% in 2010, its best Bolstered by continued accommodative monetary performance since 1991. In the first half of the policies in the advanced economies, financial year the economy benefitted from strong demand market conditions have continued to improve. in the Asian region, which boosted both exports From March 2010 to March 2011, the S&P 500 and the yen. However, by the last quarter of 2010, rose by more than 13% while the MSCI Asia the cumulative appreciation of the currency had ex-Japan Index rose by almost 17%. Over the blunted firms’ competitiveness and precipitated same period, advanced economy corporate a fall-off in goods and services exports. This spreads and high-yield credit spreads continued decline in trade volumes was accentuated by to narrow across different regions. the earthquake and tsunami in March 2011 as factories halted production and shipping was However, vulnerabilities persist, as highlighted disrupted. As a result, GDP contracted by 3.5% by the bailouts for the peripheral Eurozone q-o-q SAAR in Q1 2011. countries. In addition, geopolitical tensions in the MENA region and the disaster in Japan have heightened risk aversion and created spikes in Strong Growth in Asia ex-Japan was market volatility. In Japan, equity markets fell Underpinned by the Private Sector by more than 17% in the first few days after the earthquake, but saw some recovery in the During the course of 2010, the faster growing weeks after. Asia ex-Japan economies transited to a more advanced phase of the business cycle, driven In the banking sector, concern about asset quality primarily by the private sector. In spite of waning eased as the economic recovery progressed and fiscal support measures and tighter monetary banks raised capital ratios. However, this was policy in the region towards the year-end, growth overshadowed by refinancing concerns as large in the Asian economies accelerated to 8.1% in funding needs for banks coincided with those 2010, up from 2.1% in 2009. of national governments. Meanwhile, a renewed search for yield amongst investors appears to The rapid expansion in Asia ex-Japan was led by have begun. This has led to signs of a reduction robust intra-regional export demand, especially in risk premiums in some segments of advanced in the electronics manufacturing sector, as countries’ financial markets, as well as strong IT firms sought initially to replenish depleted capital inflows to emerging market economies, inventories and later to satisfy increased final increasing the risk of a possible build-up of asset demand. Personal consumption and investment bubbles and prompting many emerging market were particularly strong in the domestic-oriented governments to tighten macroeconomic policies economies of China, India and Indonesia. and introduce macro-prudential measures.

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Higher Energy Costs Push Up The economic expansion in 2010 was broad- Inflationary Pressures based, with equal contributions from the manufacturing and services sectors. Strong International commodity prices have risen in growth momentum in the first half of the year tandem with the global economic recovery and on largely reflected continued inventory restocking the back of supply disruptions, leading to stronger in the electronics sector, as well as recovery in inflationary pressures around the world. In the the sentiment-sensitive industries in the financial G3, the headline inflation rate increased to 1.9% sector. The cyclical upturn was also supported in Q1 2011, compared with a quarterly average of by a series of capacity expansions across both 1.3% in 2010, a rise that can largely be attributed manufacturing and services, providing a boost to higher oil prices. In contrast, core inflation rates in particular to pharmaceutical production and have stayed subdued. There is still significant services activities tied to the two new Integrated spare capacity available and unemployment rates Resorts (IRs). remain above their historical averages. Since the second half of 2010, growth in the In Asia ex-Japan, CPI inflation picked up sharply Singapore economy has moderated. Cyclical in 2010, with food and oil prices being the main support from the inventory restocking cycle contributors owing to their substantial weights in started to fade in Q3, alongside a temporary CPI baskets. During the early months of 2011, pullback in pharmaceutical output. However, as headline inflation in this region rose further as the global recovery gained traction at the turn food and energy costs escalated. Core inflation of the year, the domestic economy saw another was also on the rise as domestic resource step-up in activity, posting growth of 22.5% q-o-q constraints became more binding amidst robust SAAR* in Q1 2011. Manufacturing and trade- economic growth. related services were supported by improving demand in key export markets, while growth in the financial sector was underpinned by firm activity Singapore: Record Growth in 2010 in the intermediation and insurance industries. Meanwhile, tourism services were buoyed by Following a mild contraction in the previous year, increased visitor inflows from the region. the Singapore economy recovered strongly in 2010 to grow by 14.5%, the fastest annual rate on For the rest of 2011, underlying growth drivers record. (Chart 1) This turnaround outperformed are expected to remain broadly intact, although the 6.6% average rebound in the aftermath of the the expansion may be more moderate. Asian Financial Crisis, the dotcom bust and the Nevertheless, a protracted spike in oil prices, a 2003 SARS outbreak. By the end of Q4 2010, deterioration in the Eurozone debt crisis, or a GDP levels had surpassed the pre-recession more widespread nuclear fallout in Japan could peak by 10%, marking a decisive exit from the threaten global growth and dampen the outlook Great Recession. for Singapore.

* As at 29 June 2011

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Chart 1 : Singapore’s GDP Growth

40

30 QOQ SAAR 20 YOY Growth 10 Per Cent 0

-10

-20 2009 Q2 Q3 Q4 2010 Q2 Q3 Q4 2011 Q1

Consumer Prices and Wages inflation up to 2.8% in 2010. (Chart 2) MAS Remain Elevated Core Inflation, which excludes the costs of accommodation and private road transport, In 2010, total employment grew by 115,900, was lower at 1.5%. three times that of 2009, with the labour force participation rate reaching a record high. In Looking ahead, CPI inflation is likely to stay response to the strong economic upturn and elevated after the 5.2% recorded in Q1 2011. tight labour market, wage growth accelerated in The tight labour market will continue to exert most sectors. upward pressure on costs and prices, while global oil and food prices are likely to remain firm Meanwhile, sharp increases in car prices given supply shocks and strong demand as the and global oil prices pushed domestic CPI global economy slowly recovers.

Chart 2 : Contribution to CPI Inflation

6

4

2

0 % Point Contribution

-2

2009 Q2 Q3 Q4 2010 Q2 Q3 Q4 2011 Q1

Inflation Rate Accommodation Food Pte Rd Trpt ex-Petrol Services Oil-related Others

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MONETARY POLICY stance in place since October 2008. In October 2010, MAS tightened further by shifting to a Singapore’s macroeconomic policies are slightly steeper appreciation of the S$NEER formulated with a medium-term orientation, and policy band without altering the level at which the are aimed at promoting sustained, non-inflationary band was centred. At the same time, the policy economic growth. Amidst the multiple shocks band was widened slightly to take into account emanating from the external environment in volatility in international financial markets. recent years, monetary policy and fiscal policy have played a countercyclical role in smoothing In April this year, the policy band was re-centred volatility in the business cycle. Chart 3 traces upwards to a level below the prevailing level of the the evolution of monetary policy, as indicated by S$NEER, with no change to its slope or width. This movements in the S$NEER, against the backdrop policy stance was to ensure price stability in an of developments in growth and inflation. MAS’ economy at a mature phase of expansion and to policy responses to recent global developments keep growth on a sustainable path. The graduated underscore the importance of the S$ as an anchor adjustment took into account MAS’ previous of stability. pre-emptive tightening in April and October 2010, the effects of which will continue to filter through In 2010, the output gap turned positive as the the economy over the rest of this year. economy recovered decisively from the Great Recession to post record GDP growth. The Amidst the turnaround in economic fortunes, macroeconomic policy stance was contractionary the FY2010 Budget marked a shift in focus in 2010 as monetary and fiscal stimuli were from crisis-containment to investment aimed at gradually withdrawn, thereby ensuring that the enhancing productivity over the medium to long policy setting was conducive to price stability and term. The FY2011 Budget built on the robust sustainable growth in the medium term. economic growth in 2010 and introduced further supply-side measures targeted at restructuring the MAS tightened monetary policy in April 2010 economy. These measures will lay the foundation by re-centring the S$NEER policy band for more sustainable and equitable growth over upwards and restoring its modest and gradual the longer term, and include initiatives to raise real appreciation path. This policy shift marked the income, support the economically vulnerable and end of the accommodative monetary policy reduce income inequality.

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Chart 3 : Key Macroeconomic Variables and the Evolution of Monetary Policy

Modest Modest & & Gradual Modest & Gradual 125 Neutral Neutral Appre- Policy Gradual Appreciation Policy Appre- ciation ciation 120

115

110 S$NEER Re-centre 105

100 Increase Slope Re-centre Slightly &

Index (Q1 2001=100) 95 Widen Band

90 Widen Band Restore Band, Re-centre Increase Maintain Re-centre Re-centre Slope Slightly

6

4 Output Gap 2 0

-2

-4

% of Potential GDP -6 -8

10

8

6 2011Q1: 5.2% 4 CPI Inflation

2 YOY % Growth 0 -2

20

15

10 2011Q1: 8.3% 5 Real GDP Growth 0 YOY % Growth -5

-10 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1

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Box 1

The MAS Core Inflation Measure for Singapore

For the past two decades, MAS has monitored a core inflation series to provide another perspective on price developments in the economy. Such a core inflation measure should have the following two characteristics. First, it should reflect persistent rather than temporary price changes. This is particularly relevant for monetary policy, which affects inflation with long and variable lags and is, therefore, not meant to address short-term fluctuations in prices. Second, core inflation should capture generalised price movements and ignore changes due to sector-specific influences or non-market factors, such as government price controls. Hence, by capturing the underlying price trends in the economy, core inflation serves as a useful input for monetary policy formulation.

Most countries exclude the costs of food and energy products from their core inflation measure as these are deemed to be volatile and largely determined by supply disturbances or changes in administrative policies. In Singapore’s case, food and energy items are included in the measurement of core inflation, as they not only have a substantial weight in the CPI basket (27%), but their prices are also directly influenced by our exchange rate-centred monetary policy. Instead, MAS Core Inflation is calculated as the CPI less the costs of accommodation and private road transport. These items are excluded because they tend to be volatile and are strongly influenced by administrative policies.

In particular, accommodation costs are subject to the influence of government rebates on HDB rentals and Service & Conservancy Charges, while private road transport costs are largely driven by the government’s motor vehicle policy, notably the Vehicle Quota System. Thus, the disbursement of HDB rebates in certain months of the year and changes in motor vehicle policy have made the costs of accommodation and private road transport extremely volatile. (Chart 4)

The MAS Core Inflation measure has served its purpose well, being less volatile than headline CPI inflation but nonetheless tracking it closely over time. (Chart 5) It is also a good indicator of underlying trend inflation, one of the most important attributes expected of a robust core inflation measure.

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Chart 4 : Quarterly CPI Price Volatility, 1991 - 2010

5

4 Average Standard Deviation Across Components Private Road Road Private Transport 3 Accommodation 2 Fuel & Utilities 1

Standard Deviation, % point Standard 0 Meals Meals & Others Food ex- Prepared Footwear Prepared Durables Transport Stationery Clothing & & Clothing Recreation Recreation Household Health Care Education & & Education Public Road Road Public Communication

Chart 5 : CPI Inflation and MAS Core Inflation

8 CPI Inflation 6

4 MAS Core Inflation 2 YOY % Growth 0

-2

1991 1995 1999 2003 2007 2010

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LIQUIDITY MANAGEMENT from MAS’ portfolio of SGS. An important enhancement was introduced in 2010 which Enhancing the Standing Facility allowed MAS to create SGS bonds on-demand for the purpose of the repo facility (the Enhanced In 2010, the AAA framework was enhanced Repo Facility or ERF). MAS lends these bonds on with the list of issuers extended to AAA-rated an overnight basis to SGS PDs, and destroys or zero risk-weighted public sector entities. The redeems them when they are returned. AAA framework, established in 2009, allowed AAA-rated Singapore dollar debt securities The ERF has given PDs greater certainty in issued by supranationals, sovereigns and obtaining specific SGS bonds. As a result, sovereign-guaranteed companies to be they are more confident in making markets to accepted at the MAS Standing Facility. These their customers and also do not need to hold securities were also eligible as liquid assets under a full suite of SGS bonds to make markets Notice 613 with the same haircut as Singapore effectively. Similarly, MAS does not need to hold Government Securities (SGS). as large an inventory of SGS bonds to operate the repo facility. As PDs and MAS have freed MAS’ ability to provide S$ liquidity to banks up their holdings of SGS over time, the market operating in Singapore was further enhanced free float has increased, allowing more SGS through expanding the network of cross-border bonds to reach genuine end-investors. Above collateral arrangements (CBCAs) established all, by removing issue-specific constraints in the with other central banks. To date, MAS has SGS market, the ERF has improved the pricing announced the conclusion of CBCAs with Bank efficiency and smoothened out the yield curve, of England, Banque de France, Bundesbank and which has enhanced SGS functioning as a price De Nederlandsche Bank, allowing commercial discovery mechanism for corporate pricing. banks to pledge Euros, British Pounds as well as eligible government securities to obtain S$ liquidity at the Standing Facility. Aside from PBC-MAS Bilateral Swap Facility improving the resilience of the local money market, CBCAs could serve an additional In July 2010, MAS established a bilateral currency purpose of improving mutual recognition of SGS swap arrangement with the People's Bank of as acceptable collateral in other central banks’ China (PBC) which will provide Chinese Yuan liquidity operations. liquidity of up to CNY 150 billion and S$ liquidity of up to S$30 billion. The swap is intended to promote bilateral trade and direct investment for Enhancing the Repo Facility economic development of the two countries by strengthening the trade and investment linkages MAS had previously operated the MAS Repo and, in particular, improving the availability of Facility (MRF), which allowed Primary Dealers financing facilities for firms based in Singapore and (PDs) to borrow SGS on an overnight basis the region that import from and invest in China.

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Box 2

Issuance of short term MAS bills

MAS announced on 29 July 2010 that short term MAS bills would be issued as part of money market operations, serving as a complement to the three key instruments, namely FX swaps, clean lending and borrowing and SGS repos, which are currently used to inject or withdraw liquidity from the financial system.

As the banking system grows and adopts higher liquidity requirements, demand for liquid regulatory assets will inevitably increase. The introduction of MAS bills increases the diversity of regulatory assets available in the market, thereby allowing commercial banks to practice better liquidity management in their operations. As these bills are negotiable, banks can sell or pledge them as collateral in the interbank repo markets as well as at the MAS Standing Facility and Intraday Liquidity Facility to obtain liquidity. The greater utility and negotiability of MAS bills also lower the costs of MAS’ sterilisation operations. The first issuance commenced in April 2011.

ENSURING SAFETY AND SOUNDNESS cross-border supervisory cooperation. Besides OF FINANCIAL INSTITUTIONS AND holding dialogues with fellow regulators, MAS also FINANCIAL SYSTEM participated in the supervisory college meetings of several international financial institutions. Prudential Supervision and Surveillance

Over the year, MAS has maintained close Fostering a Sound and Reputable monitoring and supervision of financial Financial Centre institutions and their risk exposures in light of developments in the international financial MAS is strengthening the risk-based capital system such as the European sovereign debt requirements for Singapore-incorporated banks crisis. We coordinated our macroeconomic to address lessons from the global financial crisis surveillance and supervisory functions more and promote a more resilient banking sector. In closely to identify and address the impact of July 2010, MAS amended the risk-based capital these developments in the macro-environment requirements for Singapore-incorporated banks. on individual institutions. The amendments incorporated guidance by the Basel Committee on Banking Supervision As host regulator to many systemically important (BCBS) to enhance bank-wide risk management financial institutions with large cross-border and capital planning processes under Pillar 2 operations, MAS recognises the importance of of the Basel framework as well as other policy

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enhancements to the capital rules. A second and encourage greater financial prudence phase of amendments in H2 2011 will incorporate among property purchasers. BCBS' recommended enhancements on capital requirements and disclosures for securitisations In January 2011, MAS further announced the and market risk. MAS also supports the Basel III lowering of the LTV limit to 60% for borrowers capital standards issued recently by the BCBS who have one or more outstanding housing which are designed to address both firm-specific loans as part of the targeted measures taken by risks and broader, systemic risks. The enhanced the Government to pre-empt a property bubble framework sets out minimum standards for higher from forming. The LTV limit for borrowers who and better-quality capital, provides better risk are not individuals was further lowered to 50%. coverage, introduces a leverage ratio requirement The lowering of the LTV limit was to send a to supplement the risk-based requirement, and clear signal to financial institutions to maintain proposes capital buffers which can be built up in credit standards and encourage greater good times and drawn down in periods of stress. financial prudence among property purchasers MAS will implement the Basel III capital standards already servicing one or more outstanding appropriately in Singapore. housing loans.

MAS issued a public consultation paper titled “Proposed Framework for Reinsurance Review of Deposit Insurance Management” on 30 June 2010 setting out Scheme in Singapore the proposed supervisory and regulatory framework governing reinsurance management As part of our regular review, MAS, together with of insurers. We also issued a consultation paper the Singapore Deposit Insurance Corporation in July 2010 on the proposed revisions to the (SDIC), reviewed the deposit insurance scheme existing regulatory framework for trade credit in Singapore to enhance depositor protection. insurance, political risk insurance and mortgage The enhanced scheme was implemented on 1 insurance. The proposals focused on aligning May 2011. The key changes to the Scheme were the contingency reserves and insurance risk the increase in coverage limit from S$20,000 to requirements on these three lines of business S$50,000 and the expanded scope of coverage with international practice. MAS is assessing from insuring individuals and charities to the feedback and will incorporate the relevant include other non-bank depositors such as sole changes into the legislations. proprietorships, partnerships, companies and unincorporated entities. CPF monies placed by an individual depositor with a Scheme member Property Market Measures are also insured under a separate S$50,000 coverage limit. In August 2010, MAS announced the lowering of loan-to-value (LTV) limit as part of the property measures taken by the Government. Insurance Resolution and Policy The LTV for residential property loans was Owners’ Protection lowered from 80% to 70% for borrowers who have one or more outstanding housing loans. MAS reviewed the life and general insurance The minimum cash payment was also increased Policy Owners’ Protection (PPF) schemes which from 5% to 10% for this group of borrowers. The are provided for in the Insurance Act (IA) since moves were intended to temper sentiments 1986. Two separate consultation papers were

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issued in December 2005 and December 2009 the Regulatory Regime for Listed and Unlisted respectively, which discussed policy proposals Investment Products. MAS will proceed to relating to the PPF schemes, including the impose an obligation on intermediaries to assess membership, scope and level of PPF coverage, a retail customer’s investment knowledge and continuity of insurance coverage, and funding experience before selling investment products to method. Recently, MAS consulted on the draft the customer. Customers who lack the relevant Deposit Insurance and Policy Owners' Protection knowledge or experience in unlisted specified Schemes (DI-PPF) Bill in December 2010. A investment products must be given financial 3rd consultation paper on the target fund size advice before purchasing the products. For and levies as well as the subsidiary legislation listed specified investment products, safeguards necessary for the implementation of the PPF will be required of intermediaries when approving schemes was issued in May 2011. The legislative trading accounts for customers who lack the amendments came into effect on 1 May 2011. relevant knowledge or experience in derivatives. Some other key initiatives that MAS will undertake In conjunction with the review of the PPF upon completion of ongoing discussions with schemes, MAS amended the IA to enhance the industry include the introduction of three its powers relating to the resolution of insurers new Capital Markets and Financial Advisory to strengthen MAS’ ability to secure continuity Services examination modules for product in insurance coverage, particularly for life knowledge about certain investment products. policies. Continuity of coverage is important as Representatives of intermediaries intending to life policies tend to be long-term in nature, and sell such products will be required to pass the early termination of the policies could cause relevant examination modules. a substantial loss to the policy owner due to a low surrender value or inability to take up In October 2010, MAS also issued the Guidelines new insurance cover due to advanced age or on Ongoing Disclosure Requirements for Unlisted deteriorating health. Debentures (Ongoing Disclosure Guidelines) and the Guidelines on the Product Highlights Sheet (PHS Guidelines). The Ongoing Disclosure Review of Insurance Act Guidelines aim to provide guidance to issuers of unlisted debentures on when and how to MAS is undertaking a comprehensive review of provide ongoing disclosure, and will apply to all the IA. This is to strengthen MAS' powers for issuers of unlisted debentures with tenures of effective regulation and supervision of insurers, 12 months or more. The PHS Guidelines set out enhance clarity on some Act provisions, and the form and content of the Product Highlights align the regulatory approach where possible Sheet to provide guidance to issuers and their with those taken in the banking and securities professional advisers in preparing the Product sector. MAS has consulted various stakeholders. Highlights Sheet. The PHS Guidelines will apply The changes will be incorporated into the IA and to new offers of debentures in the form of asset- its subsidiary legislations by 2012. backed securities and structured notes (including exchange-traded notes), unlisted collective investment schemes (CIS) and exchange-traded Enhancing Safeguards for Retail Customers funds which have prospectuses lodged with MAS.

In October 2010, MAS issued its response to MAS also consulted on draft amendments to the feedback received on the Consultation Paper on Financial Advisers Regulations to prohibit bank

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tellers from referring customers to representatives and to formalise industry best practices. This for the purchase of investment products. New would ensure that our regulatory regime keeps provisions that require financial advisers to pace with global developments and would carry out a due diligence exercise to ascertain help to promote the sustainable growth of whether a new product is suitable for the financial Singapore's fund management industry. Among advisers’ targeted clients before offering the new the key proposals were changes to capital and product were also proposed. MAS is currently competency requirements, as well as changes to engaging the various industry participants on business conduct requirements. These included the implementation of the above proposals and the independent custodisation of customers' expects to introduce these measures in the monies and assets, and the need for independent coming year. fund valuation.

MAS issued a consultation paper in May 2010 Industry feedback has been positive. Most as part of its comprehensive review of the Code agreed with MAS' approach of calibrating the on Collective Investment Schemes (Code). The level of regulatory and capital requirements Code sets out best practices in the management, for different categories of fund management operation and marketing of CIS. The proposed companies, based on the size and complexity amendments aim to ensure that the regulatory of their businesses, the sophistication of their regime for CIS, in particular the investment clientele, and their potential market impact. A guidelines, keeps pace with product innovation paper was issued in September 2010 to respond and industry developments, as well as regulatory to industry feedback on the proposed policies. developments in major fund jurisdictions. MAS will consult the industry in the second half of 2011 on draft legislative amendments and Following close consultation with industry these are expected to take effect in early 2012. associations and market practitioners, MAS issued its response to the feedback received and the revised Code on 8 April 2011. The amendments Achieving Fair Dealing Outcomes include introducing a list of permissible investments, strengthening safeguards on the Following the issuance of the Guidelines on use of financial derivatives, enhancing guidelines Fair Dealing - Board and Senior Management on funds’ securities lending activities and Responsibilities for Delivering Fair Dealing standardising the methods used to calculate any Outcomes to Customers (Fair Dealing Guidelines) performance fees imposed. The revised Code will in April 2009, MAS surveyed selected financial come into effect on 1 October 2011. institutions, including banks, insurers, capital markets services licensees and licensed financial advisers, during the first quarter of Enhancing Regulatory Regime for Fund 2010. The survey focused on whether the Board Management Companies and senior management have taken active steps to align business practices with the fair MAS issued a consultation paper on the dealing outcomes. proposed changes to the regulatory regime for fund management companies in April 2010. The MAS noted from the survey responses that proposals aimed to enhance regulatory oversight most financial institutions have taken positive over fund management activities in Singapore steps to embed the recommendations in the

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Fair Dealing Guidelines into their business on the Board as an additional criterion in practices and to create greater awareness of determining the independence of directors. the Guidelines amongst their staff. However, The number of independent directors required the survey also revealed the need for greater on the Board and Board Committees was also involvement and leadership by the Board and increased from one-third to a majority. MAS senior management in leading their organisations' also included guidance on our expectations fair dealing initiatives. MAS would also like to on roles, responsibilities and skills of the see more financial institutions incorporating Board in overseeing the relevant FIs' risk key performance indicators for achieving fair management and compensation systems. dealing outcomes in the remuneration of their Additional guidelines on establishing a continuing representatives and senior executives. This is an development programme for directors and the important way to align the interests of financial need for directors to commit sufficient time and institutions with that of their customers and to have the appropriate skills to perform their roles incentivise the sales staff and senior executives effectively were introduced. to deliver fair dealing outcomes. MAS wrote to all financial institutions providing financial advisory In addition, MAS established the Corporate services in December 2010 to share our broad Governance Council in February 2010 to promote findings from the survey. a high standard of corporate governance in listed companies in Singapore. The Council is chaired MAS will continue to actively engage financial by Alan Chan, Chief Executive Officer, Singapore institutions through various channels such as Press Holdings and comprises representatives dialogues, company visits and inspections to from the business community and various assess their progress in embedding fair dealing in stakeholder groups. Since its establishment, their day-to-day dealings with customers. the Council has carried out a comprehensive review of the Code of Corporate Governance to enhance the corporate governance framework Enhancing Corporate Governance Standards in Singapore. A public consultation paper was issued in June 2011 to seek comments on the There has been increased emphasis on proposed changes to the Code. The Council effective corporate governance internationally will review the feedback received, and thereafter following the global financial crisis. In April submit its finalised recommendations to MAS 2010, MAS completed a consultation on by end 2011. proposed amendments to the corporate governance regulations and guidelines for locally incorporated banks, financial holding Conclusion of First Two Civil Penalty Cases companies and direct insurers (relevant FIs). The revised regulations and guidelines were In 2010, MAS saw the conclusion of its first issued in December 2010. The enhanced two civil penalty trials. On 27 May 2010, the corporate governance framework emphasises High Court found that the former Chief Risk the importance of the role played by the Board and Financial Officer of a Singapore-listed in overseeing the soundness of their financial company contravened the insider trading institutions. MAS tightened the definition of prohibition in the Securities and Futures Act independence by requiring the Nominating and, on 26 July 2010, ordered that he pay Committee to consider the length of service a civil penalty of $67,500 and legal costs to

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MAS. On 1 March 2011 the Court of Appeal penalty of $250,000 to MAS for trading with fully dismissed the defendant's appeal against the intention of creating a false or misleading the High Court's decisions. appearance in the price of shares of a Singapore- listed company. The appeal by the defendants Separately, on 17 September 2010, the High in this case was heard by the Court of Appeal Court ordered a Malaysian fund manager and on 14 March 2011 and the verdict has yet to be its Chief Executive Officer to each pay a civil released at the time of printing of this report.

Box 3

The Representative Notification Framework

The Representative Notification Framework (RNF), launched on 26 November 2010, allows financial institutions to lodge notifications with MAS electronically via the online system for their representatives who intend to conduct regulated activities under the Securities and Futures Act and the Financial Advisers Act. This system streamlines the notification process for individuals carrying out regulated activities across the industry. As part of the notification, financial institutions are to certify that the representatives whom they intend to appoint are fit and proper and meet the competency, financial soundness and integrity standards required.

Once a notification has been processed, the name of the proposed representative would be published on the online Register of Representatives on MAS website. Besides the name of the representative, the regulated activities which the representative is allowed to conduct, the principal companies which the representative has worked for within the past three years and any formal regulatory action taken by MAS against the representative, would be displayed on the Register.

Currently, there are more than 30,000 appointed representatives published on the Register. All representatives are assigned a unique representative number, which will stay with them even if they change principals. With this number, members of the public may verify the representatives whom they are dealing with against the Register, thereby reducing their risk of dealing with unregulated individuals. Financial institutions are encouraged to make the unique representative numbers of their representatives readily available to consumers for consumers to verify the representative's regulatory status. Similarly, consumers should request for the representative number from their representatives to conduct their own checks on the Register.

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Enhancing Market Conduct accumulation in Asia will drive demand for financial services. From April 2010 to March 2011, MAS published a total of 45 formal regulatory and enforcement The Singapore corporate debt market continued actions against companies and individuals to register strong growth. Outstanding Singapore for market conduct breaches. These actions dollar debt securities grew 14% to S$84.8 included reprimands, composition of fines, billion in 2010, on the back of a 69% growth in imposition of civil penalties, and issuance of Singapore-dollar corporate issuances to S$25.9 prohibition orders. Over this period, MAS also billion compared to the same period in 2009. took other regulatory and administrative actions Non-Singapore dollar corporate issuances in another 232 cases. grew 24% to S$33.7 billion from 2009. Foreign entities accounted for 19% of all Singapore-dollar corporate issuances in 2010. Audit Assurance According to the latest survey by the Bank for During the year, an extensive programme of risk- International Settlements, average daily foreign based audits, covering core functions of MAS and exchange (FX) turnover volume in Singapore the key IT systems supporting these functions, registered a 10% growth from US$242 billion in was conducted by the Internal Audit Department April 2007 to US$266 billion during April 2010, (IAD) of MAS. IAD also evaluated the reliability of making Singapore the largest FX centre in Asia- financial records, recommended improvements Pacific ex-Japan and the fourth largest FX centre in effectiveness and efficiencies of the operations, globally, up from fifth in 2007. and worked with other departments to review the controls in new systems and business processes. The strong economic recovery of the Asian region IAD has begun a comprehensive review of MAS’ also helped Singapore’s fund management Fraud Risk Management. In addition, thematic industry to recover quickly from the crisis. Based reviews are scheduled to assess the corporate on the 2010 Singapore Asset Management governance standards within the organisation. Industry survey, assets under management (AUM) These include benchmarking against best by fund managers in Singapore reached a new governance practices, review of IT governance high of S$1.4 trillion, representing a 12% year-on- and Code of Conduct to preserve the integrity, year growth. 80% of AUM was from international dignity and reputation of MAS. sources, with more than 60% of the total assets invested in the Asia-Pacific region.

SINGAPORE AS AN INTERNATIONAL The Real Estate Investment Trust (REIT) and FINANCIAL CENTRE Business Trust sectors also saw strong growth in 2010, providing investors’-access to tap into Financial Sector Growth the region’s infrastructure-financing sector and real estate markets. Since the first REIT Singapore’s financial services sector posted listing in 2002, the Singapore REIT market has robust growth of 12.2% in 2010. With Asia grown exponentially to become the largest REIT leading the global economic recovery, the surge market in Asia ex-Japan. As at March 2011, there in trade and capital flows, strong growth of were 22 REITs listed on the Singapore Exchange Asian corporate activity and increasing wealth (SGX), with a combined market capitalisation of

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S$36 billion. 2010 also saw the listing of several Promoting Partnership Frameworks large REITs, including Mapletree Industrial Trust Singapore’s position as a political risk insurance and the Sabana Shari'ah Compliant Industrial and infrastructure finance centre within Asia REIT, the world’s largest Shariah-compliant REIT Pacific received a boost from the establishment by asset size and the first Islamic REIT to be of the Multilateral Investment Guarantee Agency’s listed on the SGX. As at March 2011, there were (MIGA) Asian operations in August 2010. MIGA also nine business trusts listed on SGX. This aims to promote foreign direct investment into includes Hutchison Port Holdings Trust, which developing countries by providing political risk raised US$5.5 billion and is the largest IPO in insurance to the private sector, and its enhanced Singapore and South East Asia to date. Asian presence will provide more efficient access for Asian investors looking at regional or global Several milestones were also achieved in investment opportunities. Islamic finance in 2010. In June, the Securus Data Property Fund, the world's first Shariah- Trading and Clearing Infrastructure compliant data centre fund, jointly managed The financial crisis has triggered calls for by Keppel DCIM and AEPim, announced its regulatory reviews to improve transparency initial closing with US$100 million invested by and strengthen risk management for derivative institutional investors. In August, Khazanah instruments. National authorities and international Nasional Berhad, the investment holding arm of bodies such as G20 have embarked on efforts the Government of Malaysia, placed out its single to strengthen regulation of the over-the-counter largest Sukuk issuance of S$1.5 billion, the largest (OTC) derivatives market. Key initiatives include Singapore Dollar issuance by a foreign issuer standardisation of OTC derivative contracts, so far in Singapore. These deals have added mandating the trading of OTC derivative to the broadening range of Shariah-compliant contracts on exchanges or organised trading investments and are evidence of the depth and venues, central clearing and trade reporting diversity of Singapore's asset management and requirements for these instruments. capital markets. The fall out from the financial crisis saw an increase in demand from the industry for risk Promoting Partnership Framework and management solutions. Correspondingly, SGX Enhancing Infrastructure AsiaClear, SGX’s OTC derivatives clearing arm, saw a strong increase of more than 59% y-o-y Singapore’s resilience as an international in 2010 in the volumes of energy, freight and dry financial centre is largely attributed to its strong bulk related derivatives cleared on its platform. In fundamentals of high regulatory standards, November 2010, AsiaClear expanded its clearing stable domestic economy, pro-business services to include OTC financial derivatives operating environment and its highly competent starting with interest rate swaps denominated in and experienced financial sector workforce. Singapore and US Dollar. This will help strengthen By creating the right environment, Singapore risk management and transparency in the OTC can facilitate global players in harnessing derivatives market, and better support derivative opportunities in the region and enable long term activities in Singapore. orderly and sustainable growth.

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Box 4

Private Banking Industry - Code of Conduct

The Singapore private banking industry launched a Code of Conduct for the Private Banking industry (PB Code) in April 2010. The PB Code was the result of industry-led effort to enhance the competency of private banking professionals and foster high market conduct standards. Under the PB Code, private banking professionals are expected to pass a common competency assessment called the “Client Advisor Competency Standards” (CACS). The CACS ensures that they have foundational level of competency before they can engage with clients.

There have also been continual efforts to Infrastructure for Long Term Growth enhance our infrastructure for commodity derivatives trading. In August 2010, Singapore The Government completed Phase 1 of the Mercantile Exchange (SMX) was launched in development of the Marina Bay Financial Centre Singapore as the first Pan-Asian multi-product (MBFC) in 2010. This is part of an initiative to commodity derivatives exchange. In the second seamlessly extend the existing business district half of 2010, SGX and its subsidiary, SICOM, and double the size of the financial district to moved to consolidate their commodity contracts support the long term growth of Singapore’s onto a single trading platform to integrate and financial industry. The newly completed Towers enhance synergies between their commodity 1 and 2 of the MBFC provide a total of 1.62 businesses. In February 2011, Cleartrade million square feet of prime Grade A office space Exchange established a presence in Singapore and offer financial institutions with purpose- to provide an electronic trading platform for built facilities meant to cater to their front and OTC commodity derivative trades in a range of mid-office needs. Tower 3 of the MBFC, which products, including Forward Freight Agreements. will be the largest office Tower in Singapore These developments continue to cater to the when completed by 2012, comprises 1 million growing needs of market participants and square feet of prime office space. The MBFC, contribute to the vibrancy and efficiency of together with Changi Business Park, are two Singapore's trading ecosystem. major new physical clusters developed to cater to the next phase of growth of the Singapore financial centre.

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Raising Standards and and settlement system, which enables its Building Competencies participants to make immediate settlement of transactions and funds. A new release was MAS continued to invest in the deepening of implemented in November 2010 to support competencies within the financial sector which the Society for Worldwide Interbank Financial remains key in Singapore’s development as an Telecommunication (SWIFT) message international financial centre. format changes for 2010 and to cater for the handling of MAS Bills and deposits from Deepening Competencies in Banking non-MEPS+ counterparties to achieve better Working with the industry, the Institute of Banking risk management, and strengthen our liabilities and Finance (IBF) rolled out the new Corporate management capability. The MEPS+ hardware Banking Common Examination in September was also upgraded in September 2010 to cater 2010. This applies to new entry-level Corporate for greater capacity and to provide greater Banking relationship managers (RMs) who will resilience, efficiency and ease of management. now be required to sit for a common examination modeled after the Financial Industry Competency In view of the systemic impact of MEPS+ as Standards (FICS). By the end of 2010, nearly 150 a national payment system, MAS conducts RMs have gone through the assessment. contingency exercises both independently as well as with the MEPS+ banks, CLS and SWIFT Building Research Capabilities to ensure the system remains resilient and The global financial crisis highlighted the stable minimising market disruptions. need to deepen our research and innovation capabilities to better understand and respond to risks. MAS continues to facilitate the Managing Dollars and Cents efforts of training and research centres, such as the National University of Singapore-Risk In February 2011, MAS appointed Certis CISCO Management Institute(NUS-RMI), Singapore Security Pte Ltd, to manage the processing and Management University-Sim Kee Boon Institute distribution of the S$2 and S$5 notes to enhance for Financial Economics, Singapore Management efficiency in the recirculation of these notes. University-BNP Paribas Hedge Fund Centre, and INSEAD-Asia Pacific Institute of Finance. MAS was also among the top three recipients of In 2010, the launch of EDHEC-Risk Institute, the 2010 Best Currency Website Awards. The Asia, and research projects such as the Currency Awards programme is sponsored by NUS-RMI's Credit Rating Initiative, added to the Currency News and managed by the International vibrancy of this research eco-system. Association of Currency Affairs.

As at 31 March 2011, the gross and active CURRENCY AND PAYMENT SYSTEM currency in circulation was S$25.9 billion (see Chart 6) and S$23 billion respectively. The gross MEPS+ currency in circulation increased 9% over the year, with S$53.8 billion worth of notes and coins MAS operates MAS Electronic Payment System issued to banks and S$51.7 billion returned. (MEPS+), Singapore’s real-time gross payment

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In June 2010, MAS launched the inaugural Youth Olympic Games (YOG) coins to commemorate the event which was held in Singapore in August 2010. The coins all bear the YOG official marks with the silver version featuring a crescent-shaped hologram with patterns of the Singapore lion head, packaged with four pieces of medallions bearing various sport pictograms with local orchids at the rim.

Youth Olympic Games (YOG) commemorative coins

Chart 6 : Gross Circulation of Currency

30,000

25,000

20,000

15,000 S$ Million 10,000

5,000

— 2007 2008 2009 2010 2011

Gross Circulation (S$Million) 2007 2008 2009 2010 2011

Notes 16,597.55 18,305.91 21,052.04 22,653.49 24,742.50

Coins 1,0 37.6 4 1,084.19 1,118.75 1,153.39 1,197.58

Total 17,6 3 5.19 19,390.10 22,170.79 23,806.88 25,940.08

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OUR PARTNERS W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

VALUING PARTNERSHIPS BUILDING COOPERATION W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

OUR PARTNERS Valuing Partnerships, Building Cooperation

ENHANCING STRATEGIC PARTNERSHIPS regimes as a Steering Group member. The IN AN EVOLVING FINANCIAL LANDSCAPE group held its first meeting in March 2011. In addition, we participated in the FSB workgroup MAS focused on global financial stability and on supervisory intensity and effectiveness, regulatory reform in the past year. At key which was formed in Q2 2010, as well as the international regulatory and finance fora and FSB compensation peer review team for 2011. conferences, we participated in discussions We are also a member of the FSB consultative on crisis lending, surveillance, governance and group involved in the preparation of a FSB report the development of international standards to G20 Leaders on options to advance consumer to strengthen the global financial system. In finance protection. addition, we continued to strengthen cooperation with our industry partners, including financial MAS is a member of the International Organisation institutions, the public sector and academia. of Securities Commissions (IOSCO). In June 2010, IOSCO adopted a revised set of Objectives and Principles of Securities Regulation (IOSCO Enhancing Global Financial Stability and Principles). Following the adoption of the revised Regulatory Reform IOSCO Principles, MAS has, as a member of the IOSCO’s Implementation Task Force (ITF), As members of the main committees and been actively involved in the work on revising several working groups of the Basel Committee the IOSCO’s Methodology for Assessing on Banking Supervision (BCBS), International Implementation of the IOSCO Principles. Other Association of Insurance Supervisors (IAIS), than the ITF, MAS is a member of the Asia-Pacific Financial Stability Board (FSB) and Bank for Regional Committee, the Standing Committee International Settlements (BIS) Committee on on the Regulation of Secondary Markets and the Payment and Settlement Systems (CPSS), MAS Standing Committee on the Regulation of Market continues to contribute actively to discussions on Intermediaries. MAS was also admitted to the international regulatory reform. MAS co-chairs Standing Committee on Investment Management the BCBS Core Principles Group which is in December 2010. reviewing the Basel Core Principles for Effective Banking Supervision. Drawing on the lessons MAS is a member of IOSCO Taskforce on over- learnt from the global financial crisis, the review the-counter (OTC) Derivatives Regulation, which examines the BCBS’ guidance on supervisory was formed in October 2010 to follow up on mandates, powers, resources and independence the G20 and FSB's recommendations on OTC for effective banking supervision. Besides derivatives. In February 2011, the Taskforce participating at the FSB Plenary and its three completed and published its first report on Standing Committees, MAS also contributed to trading of OTC derivatives. The report analyses the FSB’s work on promoting effective resolution the benefits, costs, and challenges associated

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with increasing exchange and electronic trading and information sharing by defining a common of OTC derivative products. It also contains set of principles and procedures for information recommendations to assist the transition of exchange between signatory authorities regarding trading in standardised derivatives products the supervision of insurance companies. from OTC venues onto exchanges and electronic trading platforms while preserving the efficacy of those transactions for counterparties. Facilitating International Financial Discussions MAS participates in the CPSS which discusses policies and develops standards for domestic, MAS successfully hosted the 16th International cross-border, multicurrency payment, settlement Conference of Banking Supervisors (ICBS) and clearing systems. MAS also participated which was jointly organised with the BCBS. The actively in the CPSS and IOSCO joint review ICBS, held every two years since 1979, was of the existing standards for financial market designed by the BCBS to promote international infrastructures, to strengthen the standards, cooperation between banking supervisors. More and support the FSB’s initiative to strengthen than 240 senior banking representatives from core financial infrastructures and markets. In over 100 countries attended the conference. The March 2011, the CPSS and IOSCO issued themes of discussion for the 16th ICBS were for public consultation a consultative report “Towards a More Resilient Banking Sector” and (“Principles for financial market infrastructures”) “A Stable Financial Environment for Sustained which contains a single, comprehensive set of Economic Growth”. Participants exchanged principles designed to apply to all systemically views on key supervisory issues through panel important payment systems, central securities discussions and breakout workshops organised depositories, securities settlement systems, on each of the two themes. A number of senior central counterparties and trade repositories banking representatives also delivered speeches (collectively “financial market infrastructures”). and chaired discussions during the conference. The new principles are designed to ensure that the essential infrastructure supporting global financial markets is more robust and better Deepening International Cooperation placed to withstand financial shocks. When finalised, the new principles will replace the In March 2011, Deputy Prime Minister Tharman three existing sets of CPSS and CPSS-IOSCO Shanmugaratnam was appointed as the standards – the Core Principles for Systemically Chairman of the International Monetary Fund’s Important Payment Systems (2001), the (IMF) International Monetary and Financial Recommendations for Securities Settlement Committee (IMFC). The IMFC is the key advisory Systems (2001), and the Recommendations for body of the IMF Board of Governors that sets Central Counterparties (2004). the policy direction for the IMF. At the Spring Meetings in April 2011, the IMFC tasked the IMF In addition, MAS chairs the Insurance Core to produce a consolidated multilateral surveillance Principles Coordination Group which sets out report by September 2011, agreed on the need the supervisory and regulatory standards for all to develop a “comprehensive and balanced IAIS members. MAS was accepted as the 10th approach” for the management of capital flows, signatory to the IAIS Multilateral Memorandum and expressed support to enhance the IMFC’s of Understanding (MMoU) on 24 June 2010. The role “as a key forum for global economic and MMoU provides a formal basis for cooperation financial cooperation”.

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As a key financial centre, Singapore participated (SCE) and the respective Governments of in the G20 Seoul Summit in November 2010. We Indonesia and Vietnam to launch two new joint joined G20 members in supporting the call for projects. The MOUs provide for the SCE to a coordinated global effort to achieve strong, develop an urban transportation plan and identify sustainable and balanced growth, committing transport-related infrastructure investment to implement financial regulatory reforms and opportunities in Danang, and develop a PPP more effective oversight and supervision, bulk water supply system project in the city of supporting a stronger IMF by enhancing its Lampung, Indonesia. legitimacy, credibility and effectiveness, as well as contributing to initiatives to strengthen global financial safety nets. Strengthening Capital Markets Development and Regional Surveillance Singapore continues to contribute actively towards international Anti-Money Laundering Within ASEAN, MAS is working with its and Counter Terrorism-Financing (AML/CFT) counterparts and the private sector to promote standard-setting discussions at the Financial the strengthening and deepening of regional Action Task Force (FATF), and regional AML/ capital markets by enhancing market linkages, CFT efforts through our participation at the Asia- market access and market liquidity. MAS Pacific Group on Money Laundering (APG). participates in the ASEAN Capital Markets Forum to create conditions that are more conducive To support international debate on key issues for multi-jurisdictional offerings within ASEAN pertaining to the international monetary system, and raise the attractiveness of ASEAN as an including on capital flows, surveillance and international fund-raising centre. The initiatives international financing arrangements, MAS are undertaken with an aim to achieve greater co-hosted a High-Level Conference with the IMF integration of the region’s capital markets under on the post-crisis international financial system the ASEAN Economic Community Blueprint 2015 in September 2010. (AEC Blueprint). The AEC Blueprint was jointly adopted by ASEAN leaders at the 13th ASEAN MAS continued its strong partnership with the Summit on 20 November 2007 to establish World Bank Group in 2010 by jointly organising ASEAN as a single market and production base, the second World Bank – Singapore Infrastructure with free flow of goods, services, investments Summit. The event marked the launch of the and skilled labour, as well as free flow of Infrastructure Finance Centre of Excellence capital. As chair of the Working Committee on (IFCOE) which aims to facilitate the flow of private Capital Market Development under the ASEAN capital to public infrastructure projects. The IFCOE Finance Ministers’ Meeting process, MAS works will provide policy advice to regional governments with our ASEAN counterparts to promote the and assist in structuring commercially viable strengthening and deepening of regional bond infrastructure projects for private sector investors. markets. In 2010, the Committee developed Under the IFCOE partnership, Memorandums of a Bond Market Development Scorecard to Understanding (MOU) were signed between the measure the state of ASEAN’s bond market World Bank, Singapore Cooperation Enterprise development, openness and liquidity. Through

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this scorecard, the Committee will look to Pursuing Closer Bilateral Engagements speed up the pace of regional capital market development through targeted and systematic MAS cooperates closely with our counterparts capacity building initiatives. in the region to effectively carry out our duties as Singapore’s central bank and financial sector At the Executives’ Meeting of East Asia-Pacific regulator. We maintain regular economic and Central Banks1 (EMEAP), MAS assumed policy dialogue and technical exchanges with the chairmanship of the Working Group on fellow central banks and financial regulators. Financial Markets (WGFM) in July 2010. WGFM Issues discussed included macroeconomic has done significant work in strengthening policy, Asia’s response to the financial crisis, regional financial markets, notably through the and cross-border financial supervision. MAS Asian Bond Fund initiative. MAS will work with also hosted study visits from several regional EMEAP members to further develop safety nets central banks and conducted briefings on topics for cross-border flows and enhance the EMEAP from macroeconomic policy and supervisory countries’ local capital markets. methodology to technology infrastructure.

MAS also participates actively in the annual ASEAN Insurance Regulators’ Meetings (AIRM). Strengthening Cooperation with Substantive topics of interest were discussed, Industry Partners including ASEAN insurance cooperation and information exchange, and enhancing insurance Enhancing Payment Card Security penetration in ASEAN. MAS will host the 14th There is a rising global trend in payment AIRM in 2011 in Singapore. card fraud involving credit and debit cards. Although the payment card fraud rate in In May 2010, ASEAN+3 Finance Ministers Singapore has been relatively low over the announced plans to establish the ASEAN+3 last few years, it is necessary to strengthen Macroeconomic Research Office (AMRO) in measures to combat payment card fraud. In late Singapore. This follows the entry-into-force-in 2009, MAS announced the following four key March 2010 of the Chiang Mai Initiative measures to enhance the security of payment Multilateralisation (CMIM), a US$120 billion card transactions: multilateral currency swap facility that aims to address short-term liquidity and balance of i) Replacing magnetic stripe-only cards with payment difficulties faced by the ASEAN+3 EMV dynamic data authentication chip cards; economies. As the independent surveillance ii) Introducing first-usage alert and activation unit of the CMIM, AMRO, officially commenced procedures for new/replacement cards; operations in May 2011. AMRO will monitor the iii) Notifying cardholders each time a transaction macroeconomic and financial situation of the is made based on a pre-determined value ASEAN+3 region and play a key supporting threshold; and role in the decision-making process of the CMIM. iv) Instituting a one-time password for card-not- Singapore is committed to working closely with present transactions. ASEAN+3 and AMRO to bring about its success.

1 The EMEAP grouping comprises the central banks and monetary authorities from Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore and Thailand.

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Over the last year, the banking industry has tools to allow governments and the industry to made significant progress in adopting the above better understand potential Asian catastrophe measures and providing cardholders with greater losses and develop risk management strategies. security in payment card transactions. In addition, the Insurance Risk and Finance Financial District Security Programme (FDSP) Research Centre which was a collaboration Since the launch of the FDSP in 2009, MAS between French reinsurer SCOR and the has collaborated with the Singapore Police Nanyang Business School, was launched in Force and Singapore Civil Defence Force to March 2011. It aims to produce research that will engage the financial industry and develop help the insurance industry meet Asia’s growing initiatives to enhance the physical security, crime protection needs and encourage a greater culture prevention as well as contingency response of research and dialogue on insurance and and business continuity management within actuarial science issues. the financial district. Some key initiatives include developing a baseline security standard for In October 2010, Professor Barry Eichengreen, financial institutions; establishing a contingency the inaugural Term Professor in Economics and response framework and communication Finance, made his second visit to MAS and protocols during crisis; and studying the NUS under the joint Professorship set up in industry’s reliance on key service providers and March last year. He presented a public lecture critical infrastructure. on “The Long-term Consequences of the Financial Crisis”, and was also invited by IBF to Addition of Primary Dealer deliver the keynote speech at their Distinguished Primary Dealers play an important role as specialist Speakers' Series-cum-Gala Dinner. MAS and intermediaries in the Singapore Government NUS appointed Professor Michael Spence, Securities (SGS) and Singapore dollar markets. 2001 Nobel Laureate in economic science, as To foster further growth and development of the the second Term Professor in May 2011. During Singapore debt market, MAS regularly consults his visit here, Professor Spence shared his with market participants, including Primary insights on the global economy with members Dealers. On 1 December 2010, The Australia and of the MAS Board, MAS economists, and faculty New Zealand Banking Group Limited commenced and students at NUS. He also delivered a public operations as the 13th Primary Dealer. lecture on the key findings from his latest book “The Next Convergence: The Future of Economic Partnership with Academia Growth in a Multi-speed World”, which explored MAS is supportive of the development of the wide-ranging dynamics of economic growth the research and development capacity in areas and proposed recommendations on how to relevant to insurance, in order to facilitate the sustain the pace of development in emerging development of robust pricing and risk models market economies. He will return to Singapore in in the industry. The Institute of Catastrophe September 2011 on the second leg of the term Risk Management (ICRM) was launched in appointment. The professorship programme January 2010, and is the first multi-disciplinary aims to strengthen Singapore’s financial and risk management institute of its kind in Asia. The economic research infrastructure and contribute ICRM, supported by the finance, insurance and to a vibrant research community and culture at reinsurance industry, will develop models and local universities.

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MAS hosted other academics under its research projects, while Professor Peter Eminent Visitor Programme during the year. Phillips (Yale University) and Professor Ilian Professor John Williamson of the Peterson Mihov (INSEAD Singapore) contributed special Institute for International Economics visited MAS feature articles to the Economic Policy Group’s in January 2011. During his visit, he exchanged Macroeconomic Review. views with MAS staff on various international monetary issues including topics related to capital flows and exchange rate regimes. Financial Conferences and Events In addition, MAS hosted Nobel Laureate Professor Edward Prescott (Arizona State A number of conferences and events were held University), Professor Frank Warnock (University in Singapore in 2010. Covering a wide range of of Virginia), Professor Jeffrey Frankel (Harvard topics related to the financial services sector, University) and Professor Eswar Prasad (Cornell including commercial banking, fixed income, University). The Economic Policy Group also wealth management, insurance and capital consulted with Assistant Professor Davin Chor markets, these events serve as a gathering point and Professor Jun Yu from SMU on specific for industry players and international investors.

Box 5

MoneySENSE – Continued Efforts to Bring Financial Education to the Community

Bringing financial education to various segments of the community continued to be the focus of MoneySENSE. MoneySENSE and the Association of Banks in Singapore (ABS) commissioned a two-year financial education initiative for primary schools in 2011. The interactive “Save & Spend Wisely” skit, produced and presented by local drama group Act 3 Theatrics, highlights the virtues of saving, budgeting as well as the concern for the less fortunate. Students also receive a guide featuring suggestions on what they and their family members can do together to save and spend money wisely. “Save & Spend Wisely” is a sequel to the MoneySENSE–ABS “Saving - the Sensible Habit” programme which has been brought to more than 160 primary schools since 2007.

In partnership with Mediacorp, MoneySENSE launched the “Mind Your Money” series of seminars, which continued to feature celebrities and MoneySENSE speakers sharing their money management habits and actions that consumers can take to manage their finances prudently. Following the positive feedback on the English seminars, a Mandarin seminar was

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held at the end of 2010. MoneySENSE messages were also broadcast in various languages in several radio segments. MoneySENSE has also published info-advertorials in our four national language newspapers, and contributed articles to several magazines.

Enhancing consumers’ understanding of financial products In partnership with Business Times, MoneySENSE introduced the “Smart Money” column in 2010, which seeks to educate investors about the features, structures and key risks of common, new or soon-to-be launched financial products. To extend the outreach, selected topics will also be featured in The Sunday Times and Lianhe Zaobao. These complement the ongoing MoneySENSE-ABS “MyMoney” series which continued to receive positive feedback, with more than 80% of participants rating the seminars as good or excellent. Since its launch in 2009, the series has covered many financial products ranging from bank deposits to insurance and investments.

As part of a longer term approach to bring financial education to Singaporeans, MoneySENSE is also working to partner an Institute of Higher Learning to set up a financial literacy institute. The financial literacy institute will take the lead in the development and running of financial education programmes to complement MoneySENSE’s initiatives.

In the past year, MoneySENSE events saw over 98,000 attendees while media initiatives reached over 2 million consumers. These would not have been possible without the strong support and commitment from the various MoneySENSE partners, comprising the Financial Education Steering Committee1, industry associations2, community bodies and the media.

1 The MoneySENSE Financial Education Steering Committee consists of the Ministry of Community Development, Youth and Sports; the Ministry of Education; the Ministry of Manpower; the Central Provident Fund Board; the Monetary Authority of Singapore, the National Library Board and the People’s Association.

2 The industry partners that work closely on MoneySENSE include the Association of Banks in Singapore; the Association of Financial Advisers Singapore; the Consumers Association of Singapore; the Financial Planning Association of Singapore; the General Insurance Association of Singapore; the Insurance & Financial Practitioners Association of Singapore; the Investment Management Association of Singapore; the Life Insurance Association of Singapore; the Securities Investors Association (Singapore); and the Singapore Exchange Ltd.

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OUR PEOPLE W103841 size W 160mm x H 240 mm Mac.10 C.bee 1st Pantone 872C

GROWING EXPERTISE OUR GROOMING LEADERS PEOPLE W103841 size W 160mm x H 240 mm Mac.10 C.bee 2nd Pantone 872C

OUR PEOPLE Growing Expertise, Grooming Leaders

BUILDING HIGH PERFORMANCE TEAMS The MAS Academy continues to work AND A STRONG MAS FAMILY closely with Peer Groups to deepen and share knowledge in specialist subject areas The past year continued to present challenges of importance to MAS’ work. Last year, we for MAS staff who kept up a high level of vigilance introduced several in-house specialist training on all fronts to maintain stability and soundness programmes on financial reporting standards in our financial sector. MAS staff displayed for banks and practical accounting issues in resourcefulness in dealing with difficult issues, financial institutions, stress testing, as well as a and demonstrated dedication and commitment practitioner’s view on structured products. to their mission. To build high performance teams and strengthen our bond as “One MAS”, The MAS Academy also contributes to the we continue to enhance expertise and leadership training of the regional supervisory community. development and foster strong staff engagement 90 regulators attended programmes such as the through various efforts. MAS Banking Supervisors Training Programme, the MAS-Toronto Centre Regional Leadership Programme for Securities Regulators and the MAS Expertise Development Information Technology Workshop for Financial Regulators. Participants were mainly from the Asia MAS Academy Pacific, South and Central Asia, and Middle East The MAS Academy offers learning programmes regions. The content of these programmes was to address the different needs of MAS officers. enhanced to include important issues arising from The MAS Diploma in Central Banking provides the financial crisis. younger officers with broad-based knowledge of MAS’ key functions and core values. Attachment To inculcate MAS’ values and ethics, the MAS remains committed to developing our people Diploma modules incorporate MAS' institutional and creating opportunities for them to realise knowledge through case studies and sharing by their potential. In addition to the comprehensive senior MAS colleagues. Intermediate to advance training programmes which we provide to all staff, level functional training, coaching and leadership about 3% of our eligible senior officers were programmes are targeted at senior and attached to leading financial institutions and experienced staff. Topics for functional training foreign regulatory bodies during the last financial are updated yearly based on the latest training year. Besides these attachments, MAS officers needs. Following the financial crisis, training topics continued to participate actively in international on complex products, credit risk and economic fora and workgroups. These experiences allowed capital modeling, latest accounting developments our officers to keep abreast of evolving trends and and intensive financial statements analysis were developments in the financial sector and contribute delivered to enhance supervisory capabilities. to the international standard-setting process.

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Leadership Development Leadership Community Retreat Young Professionals Programme The MAS Leadership Community Retreat was As an early-stage flagship leadership held on 28 and 29 October 2010 as part of the development programme, the Young corporate planning cycle. The retreat focused on Professionals Programme (YPP) helps young how MAS can better understand and respond officers learn new skills in personal productivity to its risk environment in the post-crisis financial and effectiveness. Besides honing leadership landscape. In addition, the Leadership Community skills among young professionals and emerging discussed the enhancement of MAS’ resources managers in MAS, the programme also seeks to and capabilities to achieve our priorities. build lasting networks among staff to strengthen collaboration in the workplace. Coaching To encourage and support continuous learning, People Leadership Programme MAS has put in place a coaching framework to In its second year of implementation, the People equip supervisors with skills to coach their staff Leadership Programme (PLP) is our second- and teams. A group of MAS coaches has also stage leadership development programme. been formally certified under a Workplace Coach Targeted at early leaders, the PLP provides Certification Programme which is recognised by basic leadership training in areas such as the International Coach Federation. The coaching managing role change, harnessing the strength practice has led to a more supportive and of a team, and building high-performing teams. engaging work relationship among supervisors To complement a series of classroom trainings and staff, as well as greater sense of achievement sequenced over an eight-month period, the in the problem solving process. To assimilate new programme also incorporates peer coaching staff into the MAS working environment, a group and on-the-job assignments to further hone and of mentors has also been appointed to help internalise the newly acquired leadership skills. new MAS staff get up to speed on the job more quickly and effectively.

Box 6

Honing Specialist Knowledge - The Inaugural Trainer and Peer Group Awards

Senior experienced MAS officers actively contribute to the learning of other officers in MAS. In 2010, almost half of the trainers delivering training at MAS Academy programmes were MAS staff. They share institutional knowledge and inculcate MAS’ values into our training programmes. Their efforts were recognised with the inaugural awards presented to outstanding trainers at the Staff Seminar in March 2011. Awards were given to the Best New Trainer, Most Active Trainer, Best Performance (In-house Training Events), Best Performance (Regional Training Events) and Star Trainer. The Most Active Peer Group was also recognised for deepening and sharing knowledge, and its contribution to MAS’ work in the specialist subject area.

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Engaging Staff

MAS Staff Seminar 2011 The MAS Annual Staff Seminar held on 11 March 2011 brought together 750 staff, senior management and board members to collectively review MAS’ key initiatives in the previous year and share our key priorities for the year ahead. Senior management also shared with staff their perspectives on how MAS could continue to prepare itself to meet the challenges and opportunities ahead to serve Singaporeans even

better. To facilitate greater staff participation at the Poon Sow Lye, SAA recipient Staff Seminar, an in-house smart phone application was used to allow staff to provide ‘live’ feedback and responses to the Staff Seminar discussions. recipients were Assistant Managing Director Jacqueline Loh and Executive Director Tan Boon Gin, who were conferred the Public Administration Recognising Our People (Silver) Medal and Director Diane Leong, who received the Public Administration (Bronze) Medal. Service Appreciation Awards We extend our heartiest congratulations to all The Service Appreciation Award (SAA) recognises our National Day Award recipients. and celebrates the loyalty and contributions of our dedicated staff. The awards ceremony was held on 6 August 2010. In all, 164 staff received the Risk Management and Infrastructure SAA for service in MAS ranging from five years to 40 years. Six staff received the 40-year award. Business Continuity Management (BCM) One of the recipients, Poon Sow Lye, Prudential In May 2010, MAS conducted an organisation- Policy Department, remarked, “I am very proud wide mobilisation exercise. The objectives of the to receive the Long Service Award from MAS and exercise were to familiarise MAS' staff with the I am glad to have been part of the MAS family set up of MAS’ alternate sites and to validate for the past 40 years.” The awards ceremony also departments’ business continuity plans. All marked the first time when SAA recipients who participating departments tested the recovery had retired earlier in the year returned to join us operations at alternate sites. MAS also introduced for the celebrations. a BCM awareness and training programme to familiarise staff with business continuity in MAS. National Day Awards The programme includes a BCM Basic Training This year, 17 MAS staff were honoured for their module for all MAS staff, and a more advanced contributions and service to the nation. Among the module for key department representatives.

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Enterprise Risk Management We continued to strengthen our processes and capabilities for managing risks, including operational and reputational risks. A cross- department working group was also formed to review policies relating to the management of MAS' information security. To enhance the risk management culture and raise risk awareness among staff, MAS also organised a series of talks and invited speakers from the public sector, academia and industry to share their views and Family Day 2011 experiences on relevant topics. For example, MAS jointly organised a Security Awareness Week in September 2010 with the Criminal Investigation Department to feature educational materials on terrorism and various types of improvised explosive devices. The event was well attended by MAS staff, tenants, members of the Financial District Security Programme with a good representation of local and foreign financial institutions as well as representatives from other Ministries.

FOSTERING CLOSER TIES Hobby Group

Closer ties within MAS been working to increase the number of hobby Family Day 2011 groups and the rate of participation. The latest This year’s MAS Family Day 2011 was held at hobby groups, such as Street Dance and Tennis, East Coast Park. Other than the fun-filled games have generated strong interest from our staff. and activities, participants enjoyed relaxing services beside the sunny beach. Healthy Lifestyle MASRC encourages healthy living and an Hobby Groups active lifestyle in the MAS community. MASRC Hobby groups are catalysts that build sponsors individual officers to participate in relationships within the MAS family as they privately-organised marathons and fitness events. bring staff with similar interests together. They Last year, MAS officers took part in events such also provide an avenue for staff to pick up new as the JP Morgan Corporate Chase Challenge hobbies. The MAS Recreation Club (MASRC) has and the Army Half-marathon.

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34th Inter-Central Bank Games (ICBG) 2010 Spring Cleaning 2011

Closer ties with counterparts Closer ties with community

Inter-Central Bank Games 2010 Charity Initiatives MAS participated in the 34th Inter-Central Bank To spread the festive cheer of Chinese New Year, Games (ICBG) held from 18 to 21 September MAS staff and their families volunteered to help 2010 in Bangkok, Thailand. The MAS athletes elderly residents living in one-room flats with competed in a wide range of games including their spring cleaning on 29 January 2011. The track and field, squash and chess. The annual spring cleaning was jointly organised by MASRC, event enabled our athletes to forge bonds with Strategic Planning Office of MAS, and Geylang participants from other regional central banks and East Home for the Aged. MAS staff also made strengthen relationships with their colleagues. cash donations to the elderly residents. In addition, MASRC organised “Grant-a-Wish”, a gift collection drive to benefit the children of Canossaville Children’s Home.

“This award is a tribute to the collective contribution of the staff of MAS who had worked hard to ensure that our monetary policy stance was appropriate for the economy during the downturn and the eventual recovery; and to foster a sound and progressive financial system, which overall stood well under stress during the global financial crisis.”

Mr Heng Swee Keat*

* Mr Heng received the “Central Bank Governor of the Year for Asia-Pacific” award by The Banker in 2011. He was MAS’ Managing Director from June 2005 to April 2011.

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Financial Statement Highlights 58 Statement by Directors 59 Auditor’s Report 60 Consolidated Statement of Comprehensive Income 62 Consolidated Balance Sheet 63 Consolidated Statement of Changes in Equity 64 Consolidated Cash Flow Statement 65 Statement of Backing of Currency in Circulation 66 Notes to the Consolidated Financial Statements 67 MAS FY2010/2011 FINANCIAL STATEMENT HIGHLIGHTS

The total assets of the Authority, including the Currency Fund, grew by $13.85 billion to $299.75 billion in the financial year ended 31 March 2011. The Currency Fund’s external assets increased by $4.03 billion to $34.05 billion. The currency in circulation backing by the Currency Fund’s net external assets rose to 128% from 123%, a year ago.

Total liabilities increased by $24.79 billion to $275.37 billion as the amounts due to the Singapore Government and financial institutions, provisions and other liabilities and the currency in circulation grew.

Most of the Authority’s assets comprise official foreign reserves, intended for the conduct of monetary policy and the defence of the Singapore dollar. These are necessarily invested in a diversified range of foreign currency assets. During the year, the Singapore dollar appreciated against most currencies, including the US dollar, Euro and Sterling Pound by 9.9%, 5.5% and 4.9% respectively, but weakened against the Yen by 1.6%. Following this, the Authority recorded a net loss of $10.94 billion, as the foreign exchange impact from the stronger Singapore dollar exceeded the interest, dividend income and valuation gains on the foreign assets held. Total expenditure rose from $0.62 billion to $0.87 billion, mainly due to higher investment and interest expenditure.

For this financial year, there will be no contribution to Consolidated Fund, nor return of profits to the Government.

58 MAS ANNUAL REPORT 2010/2011 STATEMENT BY DIRECTORS For the financial year ended 31 March 2011

In the opinion of the directors,

(a) the consolidated financial statements of the Authority and its wholly-owned subsidiary, Singapore Sukuk Pte Ltd, as set out on pages 62 to 85 are drawn up so as to present fairly the state of affairs of the Authority as at 31 March 2011, the results and changes in equity of the Authority for the financial year ended on that date, and of the cash flows of the Authority for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due.

On behalf of the Board of Directors,

THARMAN SHANMUGARATNAM Chairman

RAVI MENON Managing Director

28 June 2011

MAS ANNUAL REPORT 2010/2011 59 INDEPENDENT AUDITOR’S REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OF THE MONETARY AUTHORITY OF SINGAPORE FOR THE FINANCIAL YEAR ENDED 31 MARCH 2011

The accompanying financial statements of the Monetary Authority of Singapore (the “Authority”), its subsidiary and Currency Fund, set out on pages 62 to 85, have been audited under my direction. These financial statements comprise the consolidated balance sheet as at 31 March 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cash flow statement and statement of backing of currency in circulation for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

The management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition) and Currency Act (Chapter 69, 2002 Revised Edition) and applicable Singapore Financial Reporting Standards as explained in Note 3.1(a) to the consolidated financial statements, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

My responsibility is to express an opinion on these financial statements based on the audit. The audit was conducted in accordance with the provisions of the Monetary Authority of Singapore Act and Currency Act and having regard to Singapore Standards on Auditing. Those standards require that ethical requirements be complied with, and that the audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating, within the context of applicable laws, the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

60 MAS ANNUAL REPORT 2010/2011 Opinion

As disclosed in Note 3.1(a) to the consolidated financial statements, the Authority, in preparing these financial statements, is allowed under section 34(3) of the Monetary Authority of Singapore Act and section 21(10) of the Currency Act to comply with accounting standards to the extent that it is, in the opinion of the Authority, appropriate to do so, having regard to its objects and functions. As also disclosed in Note 3.1(a), the Authority has considered its responsibilities for managing the Singapore dollar exchange rate and the Official Foreign Reserves and is of the view that, for effective management of Singapore’s monetary policy, it would be appropriate not to meet, in some respects, the Singapore Financial Reporting Standards. The financial statements accordingly disclose less information than would be required under those Standards.

Having regard to the power given to the Authority under section 34(3) of the Monetary Authority of Singapore Act and section 21(10) of the Currency Act, in my opinion, the consolidated financial statements present fairly, based on the framework of accounting standards adopted by the Authority, the state of affairs of the Authority and its subsidiary as at 31 March 2011 and the financial transactions of the Authority and its subsidiary for the financial year ended on that date.

LIM SOO PING AUDITOR-GENERAL SINGAPORE

29 June 2011

MAS ANNUAL REPORT 2010/2011 61 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

General Reserve Fund Currency Fund Total For the year ended 31 March Note 2011 2010 2011 2010 2011 2010 in $ millions

(Loss)/Income from Foreign Operations [after transfers to/from provisions] 4 (10,362) 9,171 (42) 1,321 (10,404) 10,492

Income from Domestic and Other Operations 5 322 244 - - 322 244

Non-operating Income 6 9 8 - - 9 8

Total (Loss)/Income [after transfers to/ from provisions] (10,031) 9,423 (42) 1,321 (10,073) 10,744

Less:

Investment, Interest and Other Expenses 7 541 334 88 83 629 417

Personnel Expenditure 8 170 137 - - 170 137

General and Administrative Expenditure 9 44 47 - - 44 47

Depreciation/Amortisation 24 23 - - 24 23

Total Expenditure 779 541 88 83 867 624

(Loss)/Profit for the Year [after transfers to/ from provisions] (10,810) 8,882 (130) 1,238 (10,940) 10,120

Less:

Contribution to Consolidated Fund 18 - 156 - - - 156

Net (Loss)/Profit and Total Comprehensive (Loss)/Income for the Year [after transfers to/from provisions] (10,810) 8,726 (130) 1,238 (10,940) 9,964

The accompanying notes form an integral part of these financial statements.

62 MAS ANNUAL REPORT 2010/2011 CONSOLIDATED BALANCE SHEET

As at 31 March Note 2011 2010 in $ millions

CAPITAL AND RESERVES Issued and Paid-up Capital 10 17,000 17,000 General Reserve Fund 11 41 12,917 Currency Fund Reserves 12 7,3 40 5,404 24,381 35,321

FINANCIAL SECTOR DEVELOPMENT FUND 19 1,026 1,008 25,407 36,329

Represented by:

ASSETS Cash and Bank Balances 865 811 Singapore Government Treasury Bills and Bonds 7,274 8,274 Foreign Financial Assets 13 287,722 274,238 Gold 267 296 Other Assets 14 3,460 2,104 Property and Other Fixed Assets 15 163 175

299,751 285,898

Less:

LIABILITIES Currency in Circulation 25,940 23,807 Deposits of Financial Institutions 16 17,56 5 14,251 Provisions and Other Liabilities 17 102,191 87,271 Amounts Due to Singapore Government 18 129,674 125,248

275,370 250,577

NET ASSETS OF THE AUTHORITY 24,381 35,321

NET ASSETS OF FINANCIAL SECTOR DEVELOPMENT FUND 19 1,026 1,008 25,407 36,329

The accompanying notes form an integral part of these financial statements.

MAS ANNUAL REPORT 2010/2011 63 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Issued and General Currency Paid-up Reserve Fund in $ millions Capital Fund Reserves Total

Balance as at 1 April 2009 17,000 8,767 2,970 28,737

Total Comprehensive Income for the Year (after transfers to/from provisions) - 8,726 1,238 9,964

Transfer of Reserves to Currency Fund - (1,196) 1,196 -

Return of Profit to Singapore Government - (3,380) - (3,380)

Balance as at 31 March 2010 17,000 12,917 5,404 35,321

Total Comprehensive Loss for the Year (after transfers to/from provisions) - (10,810) (130) (10,940)

Transfer of Reserves to Currency Fund - (2,066) 2,066 -

Return of Profit to Singapore Government - - - -

Balance as at 31 March 2011 17,000 41 7,3 40 24,381

The accompanying notes form an integral part of these financial statements.

64 MAS ANNUAL REPORT 2010/2011 CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2011 2010 in $ millions

Cash Flows from Operating Activities

(Loss)/Profit for the Year (after transfers to/from provisions) (10,940) 10,120

Adjustments for: Depreciation/Amortisation of Fixed Assets and Other Assets 24 23 (Loss)/Profit before Working Capital Changes (10,916) 10,143

(Increase)/Decrease in Singapore Government Treasury Bills and Bonds 1,000 (1,385) Foreign Financial Assets (13,484) (19,496) Gold 29 26 Other Assets (1,356) (403)

Increase/(Decrease) in Deposits of Financial Institutions 3,314 (48) Provisions and Other Liabilities 14,919 6,736 Amounts Due to Singapore Government (excluding Contribution to Singapore Government and Return of Profit to Singapore Government) 7,9 62 2,702

Net Cash from/(used in) Operating Activities 1,468 (1,725)

Cash Flows from Investing Activities

Purchase of Fixed Assets (11) (9) Net Cash used in Investing Activities (11) (9)

Cash Flows from Financing Activities

Increase in Currency in Circulation 2,133 1,636 Contribution to Consolidated Fund (156) - Return of Profit to Singapore Government (3,380) -

Net Cash (used in)/from Financing Activities (1,403) 1,636

Net Increase/(Decrease) in Cash and Bank Balances 54 (98)

Cash and Bank Balances as at beginning of the year 811 909

Cash and Bank Balances as at end of the year 865 811

The accompanying notes form an integral part of these financial statements.

MAS ANNUAL REPORT 2010/2011 65 STATEMENT OF BACKING OF CURRENCY IN CIRCULATION

The Currency Fund is established under Section 21 of the Currency Act (Chapter 69, 2002 Revised Edition). Section 22 of the Act states that the external assets of the Currency Fund shall not be less than 100% of the face value of the Currency in Circulation.

As at 31 March Note 2011 2010 in $ millions

The value of External Assets and the Currency in Circulation are:

Currency in Circulation 12.2 25,940 23,807

External Assets 12.2 34,050 30,025

Less: Provisions and Other Liabilities 12.2 770 814 Net Assets 33,280 29,211

The accompanying notes form an integral part of these financial statements.

66 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

These notes form an integral part of and should be read in conjunction with the accompanying consolidated financial statements.

1 GENERAL

1.1 The Monetary Authority of Singapore (the Authority) is a statutory board established in Singapore under the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition) on 1 January 1971 and is located at 10 Shenton Way, MAS Building, Singapore 079117.

1.2 The consolidated financial statements presented relate to those of the Authority and its wholly-owned subsidiary, Singapore Sukuk Pte Ltd (SSPL). The financial statements of the Authority are not materially different from the consolidated financial statements and have not been presented separately.

2 PRINCIPAL ACTIVITIES

2.1 The principal activities of the Authority are:

a) the conduct of monetary policy, issuance of currency, management of the official foreign reserves and acting as the banker to and financial agent of the Government; and

b) the supervision of the banking, insurance, securities and futures industries, and development of strategies in partnership with the private sector to promote Singapore as an international financial centre.

2.2 The Authority’s subsidiary, SSPL, is a special purpose entity incorporated in Singapore, to issue Sukuk certificates as Shariah-compliant assets to Islamic financial institutions to meet regulatory requirements.

3 SIGNIFICANT ACCOUNTING POLICIES

3.1 Compliance with the Monetary Authority of Singapore Act, Currency Act and Singapore Financial Reporting Standards

a) The consolidated financial statements of the Authority, are prepared in accordance with the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition), Currency Act (Chapter 69, 2002 Revised Edition) and applicable Singapore Financial Reporting Standards (FRS). Section 34(3) of the Monetary Authority of Singapore Act and Section 21(10) of the Currency Act provide that the Authority, in preparing its consolidated financial statements, may comply with accounting standards to the extent that it is, in the opinion of the Authority, appropriate to do so, having regard to the objects and functions of the Authority. The Authority, having considered its responsibilities for managing the Singapore dollar exchange rate and the official foreign reserves, is of the opinion that, for effective management of Singapore’s monetary policy, it is appropriate not to meet, in some respects, the Singapore Financial Reporting Standards. The consolidated financial statements accordingly disclose less information than would be required under those Standards.

b) The preparation of consolidated financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Authority’s accounting policies, having regard to the objects and functions of the Authority. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expenditure during the financial year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from these estimates.

MAS ANNUAL REPORT 2010/2011 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

3.2 Basis of Accounting

The consolidated financial statements have been prepared under the historical cost convention and on an accrual basis.

3.3 Basis of Consolidation

a) A subsidiary is an entity that the Authority, directly or indirectly, has power to govern the financial and operating policies of, in order to obtain benefits from its activities. It is generally accompanied by a shareholding of more than 50% of voting rights. Potential voting rights that are exercisable or convertible are considered when determining whether an entity is considered a subsidiary.

b) A subsidiary is consolidated from the date control is established, acquired or transferred to the Authority to the date control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange.

c) Balances and transactions between the Authority and its subsidiary, together with any unrealised profits and losses arising from these transactions are eliminated, in preparing the consolidated financial statements.

3.4 Foreign Currency Translation

a) The consolidated financial statements are presented in Singapore dollars, the Authority’s functional currency, and rounded to the nearest million, unless otherwise stated.

b) Transactions in foreign currency are measured at the exchange rate prevailing at the date of transaction. Foreign currency gains or losses resulting from the settlement of such transactions are recognised in the consolidated statement of comprehensive income.

c) Assets and liabilities denominated in foreign currencies are translated into Singapore dollars, at the exchange rate prevailing on the balance sheet date, except for shareholdings in Bank for International Settlements (BIS) and Society for Worldwide Interbank Financial Telecommunication (SWIFT) which are translated at the rates of exchange prevailing on the acquisition dates. Exchange differences arising from the translation are recognised in the consolidated statement of comprehensive income.

3.5 Recognition and Derecognition

Purchases and sales of investments are recognised on the trade date when the Authority commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Authority has transferred substantially all risks and rewards of ownership.

3.6 Income Recognition

a) Dividend income is recognised when the right to receive payment is established.

b) Interest income is recognised on a time-proportionate basis using the effective interest method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument or, where appropriate, a shorter period to the net carrying amount.

68 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

c) Profits/losses on disposal of investments are taken to the consolidated statement of comprehensive income.

d) Licence fee income is recognised on a straight-line basis over the period of the licence.

3.7 Singapore Government Treasury Bills and Bonds

Singapore Government Treasury bills and bonds are stated at cost. Provision has been made for diminution in value, if any, based on the lower of cost and market value on an individual investment basis.

3.8 Gold

Gold is a long-term investment stated at cost. Provision for diminution in value would be made in the event of a decline other than temporary in its value.

3.9 Foreign Financial Assets

Foreign financial assets represent the Authority’s investments in a global diversified portfolio and are stated at cost. Provision has been made for diminution in value, if any, based on the lower of cost and market value on an individual investment basis.

3.10 Financial Derivatives

Financial derivatives include forwards, swaps, futures and options and are included in foreign financial assets. Other than financial instruments that are subject to margin requirements which are fair valued, provision has been made for diminution in value, if any, of other financial derivatives based on the lower of cost and market value on an individual investment basis, except for forwards and currency swaps which are valued on a portfolio basis.

3.11 Repurchase and Reverse Repurchase Agreements (“Repos” and “Reverse Repos”)

Reverse repos are treated as collaterised borrowing and the amounts borrowed are included in “Provisions and Other Liabilities”. The securities sold under reverse repos are treated as pledged assets and remain on the consolidated balance sheet. Repos are treated as collaterised lending and the amounts lent are included in “Other Assets”. The difference between the amount received and the amount paid under repos and reverse repos is recognised as interest income and interest expense respectively.

3.12 Property, Other Fixed Assets and Depreciation

a) Property and other fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the cost less residual value of the fixed assets over their estimated useful lives as follows:

Useful lives Leasehold Land Period of lease Buildings 50 years or period of lease whichever is lower Building Improvements 10 years Computer Hardware and Software 3 to 5 years Furniture, Fixtures, Motor Vehicles 3 to 5 years and Other Equipment

The residual values and useful lives are reviewed and adjusted as appropriate, at each balance sheet date.

MAS ANNUAL REPORT 2010/2011 69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

b) Computer software costs of less than $100,000 and other assets costing $1,000 and below are expensed off in the year of purchase. Any computer software costs not written off, are included in fixed assets.

c) Property and other fixed assets are reviewed for impairment whenever there is any indication that these assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated to determine the amount of impairment loss. The impairment loss is recognised in the consolidated statement of comprehensive income for the period.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal, if any, is recognised in the consolidated statement of comprehensive income. However, the increased carrying amount of an asset due to a reversal of an impairment is recognised to the extent that it does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment losses been recognised for the asset in prior years.

d) On disposal of fixed assets, the difference between the net disposal proceeds and its carrying amount is taken to the consolidated statement of comprehensive income.

3.13 Operating Leases

a) Leases where substantially all the rewards and risks of ownership remain with the lessors are accounted for as operating leases. Rental receipts or payments under operating leases are accounted for in the consolidated statement of comprehensive income on an accrual basis according to the terms of the agreements.

b) When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an income or expense in the period in which termination takes place.

3.14 Employees’ Benefits

a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Authority pays fixed contributions into entities such as the Central Provident Fund, and will have no legal or constructive obligation to pay further contributions. The Authority’s contributions to defined contribution plans are recognised in the financial year to which they relate.

b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for annual leave as a result of services rendered by employees up to the balance sheet date.

4 Income/(LOSS) from Foreign Operations

Income/(Loss) from foreign operations includes interest, dividends, profit/loss on disposal of investments, foreign exchange gain/loss and write-back of/additional provision for diminution in value of investments.

70 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

5 Income from Domestic AND OTHER Operations

Income from domestic and other operations includes mainly interest and write-back of/additional provision for diminution in value of Singapore Government Treasury bills and bonds, licence and inspection fees, revenue from currency-related operations, custody fee and revenue from services rendered to banks and financial institutions on MAS Network and MAS Electronic Payment System which provides real-time gross settlement of payments.

6 Non-Operating Income

Non-operating income includes rental and carpark income, liquidated damages and management service fees.

7 Investment, Interest AND Other Expenses

Investment and interest expenses include management fees, futures/options commissions, bank, custody and other charges arising from foreign operations, and interest paid on borrowings and reverse repurchase agreements arising from domestic and other operations. Other expenses include costs of printing of currency notes and coin operations.

8 Personnel expenditure

8.1 This includes the following:

in $ millions 2011 2010

Salaries 149 116 Employer's Contribution to the Central Provident Fund 12 10 Training and Personnel Development 4 5 Staff Benefits 3 3

The Minister-in-charge of the Authority is not paid a salary by the Authority. Directors’ fees for the year totalled $0.06 million (2010: $0.06 million). All Ministers serving on the Authority’s Board of Directors do not receive directors’ fees.

8.2 The key management personnel compensation is as follows:

in $ millions 2011 2010

Salaries and Other Short-term Employee Benefits 21 13 Other Long-term Benefits 2 2

Post-employment benefits of $0.5 million (2010: $0.3 million) were also provided to key management personnel.

Executive Directors, Department Heads and above, are considered as key management personnel for this purpose.

MAS ANNUAL REPORT 2010/2011 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

9 General AND Administrative expenditure

This includes the following:

in $ millions 2011 2010

Information Technology Expenses 10 10 Official Trips and Conferences 4 3 Information Services 4 4 Building and Mechanical and Electrical Maintenance 3 3 Consultant and Other Advisers’ Fees 2 7 Property Tax 2 1 Audit Fee 1 1

10 CAPITAL AND RESERVES

10.1 The issued and paid-up capital is wholly-owned by the Government of the Republic of Singapore.

10.2 The Authority manages its capital and reserves at an appropriate and adequate level, in pursuit of the Authority’s principal objects, as set out in Section 4 of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition) that is, to maintain price stability conducive to sustainable economic growth, foster a sound and reputable financial centre, grow Singapore as an internationally competitive financial centre and ensure prudent and effective management of the official foreign reserves of Singapore. In addition, the Authority has to determine and safeguard the reserves accumulated by the Authority during the term of office of the past Government as required by the Constitution of the Republic of Singapore.

10.3 Taking into consideration the Authority’s capital and reserves needs for its principal objects, the Authority conducts the capital and reserves adequacy assessment regularly. It includes a comprehensive assessment of risks that the Authority is exposed to, the measurement, monitoring and stress testing of these risks and an evaluation of the adequacy of the Authority’s capital and reserves in relation to these risks.

10.4 The return to the Singapore Government, from the General Reserve Fund and/or from the net profit for each financial year, is determined by the Authority and the remainder of the net profit, if any, is credited to the General Reserve Fund, in accordance with Section 6 of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition).

11 GENERAL RESERVE FUND

The General Reserve Fund is established under Section 6(1) of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition).

72 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

12 CURRENCY FUND RESERVES

12.1 The Currency Fund, established under Section 21 of the Currency Act (Chapter 69, 2002 Revised Edition), is maintained and managed by the Authority in the manner prescribed by the Act.

12.2 The assets and liabilities of the Currency Fund as at 31 March are as follows:

in $ millions Note 2011 2010

External Assets Gold 208 231 Foreign Investments 13.1 33,842 29,794 34,050 30,025

Less:

Liabilities Active Currency in Circulation 25,084 23,008 Currency Held by the Authority 856 799 Currency in Circulation 25,940 23,807

Provisions and Other Liabilities 770 814 26,710 24,621

Currency Fund Reserves 7,3 40 5,404

MAS ANNUAL REPORT 2010/2011 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

13 FOREIGN FINANCIAL ASSETS

13.1 These comprise the following:

General Reserve Fund Currency Fund Total in $ millions 2011 2010 2011 2010 2011 2010

Foreign Investments Bank Balances and Deposits 55,960 53,500 1,668 841 57,628 54,341 Securities (including Treasury bills, bonds and equities) 198,601 197,78 0 31,317 28,558 229,918 226,338 Other Foreign Investments 9,201 14,601 1,832 895 11,033 15,496

International Monetary Fund Assets (see note 13.2) Reserve Tranche 983 824 - - 983 824 Special Drawing Rights (SDRs) 1,712 2,089 - - 1,712 2,089 Poverty Reduction and Growth Facility - Heavily Indebted Poor Countries (PRGF-HIPC) 28 51 - - 28 51

Shareholding in Bank for International Settlements (BIS) (see note 13.3) 96 96 - - 96 96

266,581 268,941 34,817 30,294 301,398 299,235

Foreign Currency Liabilities (12,701) (24,497) (975) (500) (13,676) (24,997)

Total Foreign Financial Assets 253,880 244,444 33,842 29,794 287,722 274,238

74 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

13.2 INTERNATIONAL MONETARY FUND (IMF) ASSETS

The Reserve Tranche represents the amount of the paid-up portion of the Singapore quota. Special Drawing Rights are interest-yielding balances with IMF that can be exchanged for convertible currencies. Singapore participates in the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries (PRGF-HIPC). The PRGF-HIPC outstanding balance as at 31 March 2011 is SDR14.0 million [$28.1 million] (31 March 2010: SDR24.0 million [$51.2 million]), including a balance of SDR4.0 million in the Post-Special Contingent Account-2 with IMF which was transferred to the PRGF-HIPC on 24 April 2001 as an interest-free deposit maturing at the end of 2018.

13.3 BANK FOR INTERNATIONAL SETTLEMENTS (BIS)

The Authority’s shareholding in the BIS comprises the 25% paid-up value of 4,285 (31 March 2010: 4,285) shares with a nominal value of SDR5,000 ($10,002) each.

14 OTHER ASSETS

These comprise the following:

in $ millions 2011 2010

Loans, Deposits and Other Receivables 2,115 2,104 Repurchase Agreements with Singapore Government 1,345 -

3,460 2,104

MAS ANNUAL REPORT 2010/2011 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

15 PROPERTY AND OTHER FIXED ASSETS

Furniture, Fixtures, Motor Computer Vehicles Hardware and Leasehold Building and Other Work-in- in $ millions Land Buildings Improvements Software Equipment Progress Total

COST As at 1.4.2009 48 171 93 70 22 1 405 Additions - - - 6 - 4 10 Disposals - - - (2) - - (2) As at 31.3.2010 48 171 93 74 22 5 413

ACCUMULATED DEPRECIATION As at 1.4.2009 12 67 74 45 19 - 217 Disposals - - - (2) - - (2) Depreciation charge 1 4 4 12 2 - 23 As at 31.3.2010 13 71 78 55 21 - 238

NET BOOK VALUE AS AT 31.3.2010 35 100 15 19 1 5 175

COST As at 1.4.2010 48 171 93 74 22 5 413 Additions - - - 7 1 4 12 Disposals - - - (1) - - (1) Transfers - - - 4 - (4) - As at 31.3.2011 48 171 93 84 23 5 424

ACCUMULATED DEPRECIATION As at 1.4.2010 13 71 78 55 21 - 238 Disposals - - - (1) - - (1) Depreciation charge 1 4 4 14 1 - 24 As at 31.3.2011 14 75 82 68 22 - 261

NET BOOK VALUE AS AT 31.3.2011 34 96 11 16 1 5 163

76 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

16 DEPOSITS OF FINANCIAL INSTITUTIONS

in $ millions 2011 2010

Banks 17,0 6 4 13,560 Finance Companies 218 216 Securities Companies 6 6 17,28 8 13,782

International Financial Institutions 263 466 Foreign Central Banks and Others 14 3

17,56 5 14,251

Deposits from banks and finance companies in Singapore include the minimum cash balances maintained by banks and finance companies with the Authority as required under the Banking Act (Chapter 19, 2008 Revised Edition) and the Finance Companies Act (Chapter 108, 2000 Revised Edition) respectively. Deposits from securities companies represent statutory deposits from holders of capital markets services licences required under the Securities and Futures (Licensing and Conduct of Business) Regulations.

17 Provisions AND Other Liabilities

17.1 Provisions have been made for contingencies under Section 6(2) of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition). Other liabilities include borrowings from banks, borrowings under reverse repurchase agreements, the Authority’s allocations of Special Drawing Rights in IMF, creditors, Sukuk payable, accounts payable and accruals.

17.2 The Authority's allocation of Special Drawing Rights in IMF amounting to $1,488.7 million as at 31 March 2011 (31 March 2010: $1,585.0 million) is included in "Provisions and Other Liabilities".

17.3 During the financial year ended 31 March 2011, SSPL, a wholly-owned subsidiary of the Authority, issued $105.0 million (FY09/10: $64.4 million) Sukuk trust certificates with 1 year maturities and income distribution rates of 0.39% and 0.50% per annum. The Sukuk issuance by SSPL is structured on the sale-and-leaseback or Al Ijarah of property assets of the Authority. Under agreements with SSPL, the Authority will sell, leaseback, provide a purchase undertaking of the property assets and receive from and make periodic payments to SSPL.

MAS ANNUAL REPORT 2010/2011 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

18 AMOUNTS DUE TO SINGAPORE GOVERNMENT

The amounts due to the Singapore Government comprise the following:

in $ millions 2011 2010

Contribution to Consolidated Fund - 156 Return of Profit to Singapore Government - 3,380 Amounts due to Singapore Government, arising from Repurchase Agreements 1,345 - Balances and Deposits of Singapore Government 128,329 121,712 129,674 125,248

The contribution to be made to the Consolidated Fund is in accordance with the Statutory Corporations (Contributions to Consolidated Fund) Act (Chapter 319A, 2004 Revised Edition). The contribution is based on 17% (2010: 17%) of the profit for the year.

19 FINANCIAL SECTOR DEVELOPMENT FUND

19.1 The Financial Sector Development Fund (hereinafter called the Fund) is established under Section 30A of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition). It is controlled and administered by the Authority. The Authority provides administrative and accounting support to the Fund. The Fund shall be used for the objects and purposes set out in Section 30B of the Act.

78 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

19.2 The financial statements of the Fund have been prepared in accordance with the provisions of the Monetary Authority of Singapore Act (Chapter 186, 1999 Revised Edition) and the Singapore Financial Reporting Standards. The assets and liabilities of the Fund as at 31 March are as follows:

(restated) in $ thousands Note 2011 2010

ACCUMULATED FUND Capital Account 471,635 471,635 Accumulated Surplus 19.4 554,714 536,558 1,026,349 1,008,193

Represented by:

ASSETS Bank Balances and Deposits 19.5 183,344 157,9 50 Financial Assets at Fair Value through Profit or Loss 884,892 877,28 0 Loans and Receivables 13,168 14,549 1,081,404 1,049,779

Less:

LIABILITIES Financial Liabilities at Fair Value through Profit or Loss 1,427 686 Accruals and Other Liabilities 19.4 53,628 40,900 55,055 41,586 NET ASSETS 1,026,349 1,008,193

MAS ANNUAL REPORT 2010/2011 79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

19.3 The financial results of the Fund are as follows:

(restated) in $ thousands Note 2011 2010

Interest Income 27,23 8 29,927 Dividend Income 70,297 67,888 Gain from Financial Instruments at Fair Value through Profit or Loss 48,971 114,972 Foreign Exchange Loss (69,657) (41,526) Other Income 487 710 Total Income 77,3 3 6 171,971

Less:

Investment Expenses 4,074 2,471 Grants 19.4 55,106 41,522 Total Expenditure 59,180 43,993

Net Surplus and Total Comprehensive Income for the Year 18,156 127,978

19.4 Retrospective Restatement

For the financial year ended 31 March 2010, the Fund had under-accrued $11.4 million of training grants expense claim applications. The financial statements for the year ended 31 March 2010 have been restated to correct this under-accrual of the training grant expenditure. The effect of the restatement of these financial statements is an increase in grant expenditure of $11.4 million and a reduction of $11.4 million in net surplus and total comprehensive income for the year and the accumulated surplus as at 31 March 2010.

19.5 Bank Balances and Deposits

Included in bank balances and deposits of $183.3 million as at 31 March 2011 is US$50.0 million ($63.1 million) (31 March 2010: Nil) held by Singapore Exchange Ltd, a related party, in trust for a FSDF- supported market infrastructure project. The Fund reserves the right, to vary or change the amount for the project or withdraw any part of or the entire amount for this project, and recover in full, or part, any moneys disbursed if specified terms and conditions, including satisfying the project’s key performance indicators, are not met or upon the occurrence of specified events.

80 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

19.6 Related Party Transactions

a) During the financial year, the Fund placed deposits with the Authority in the ordinary course of business and at arm’s length, earning interest income disclosed below:

in $ thousands 2011 2010

Interest Income 384 4

b) The Fund’s deposit balance with the Authority at 31 March 2011 was $88.0 million (31 March 2010: $81.1 million).

19.7 The notes to the assets and liabilities and financial results of the Fund are available on the Authority’s website at http://www.mas.gov.sg.

20 STATUTORY DEPOSITS OF INSURANCE COMPANIES, REMITTANCE LICENSEES AND CAPITAL MARKETS SERVICES LICENSEES

The following statutory bank deposits, guarantees and Singapore Government Bonds of insurance companies, remittance licensees and capital market services licensees, are retained by the Authority under the Insurance Act (Chapter 142, 2002 Revised Edition), the Money-Changing and Remittance Businesses Act (Chapter 187, 2008 Revised Edition) and the Securities and Futures Act (Chapter 289, 2010 Revised Edition) respectively, and in the events specified, dealt with accordingly under the respective Acts.

in $ millions 2011 2010

Insurance Companies Fixed Deposits 198 200 Banker’s Guarantees 21 21 Singapore Government Bonds 4 4 223 225

Remittance Licensees Banker’s Guarantees 18 18

Capital Markets Services Licensees Banker’s Guarantees 75 70

MAS ANNUAL REPORT 2010/2011 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

21 COMMITMENTS

21.1 International Monetary Fund (IMF)

a) The Authority has an obligation to pay $1,863 million as at 31 March 2011 (31 March 2010: $1,053 million) which represents the unpaid portion of the Singapore quota due to IMF under Section 4 of Article III of the Articles of Agreement.

b) As a participant in the IMF’s ‘New Arrangements to Borrow’ (NAB), the Authority undertakes to provide a credit line of up to SDR1,277 million ($2,555 million) as at 31 March 2011 (31 March 2010: SDR1,277 million [$2,719 million]) in the event of a financial emergency as specified by the NAB. For the financial year ended 31 March 2011, the Authority did not grant any loan under the NAB.

21.2 Bank for International Settlements (BIS)

The Authority has a commitment, amounting to SDR16.1 million ($32.2 million) as at 31 March 2011 (31 March 2010: SDR16.1 million [$34.2 million]), in respect of the uncalled portion of its shareholding in the BIS.

21.3 Repurchase Agreements with Central Banks and Monetary Authority

The Authority has entered into bilateral repurchase agreements with various Asian central banks and monetary authority to provide liquidity assistance in times of emergency. For the financial year ended 31 March 2011, there was no request for liquidity assistance from any counterpart.

21.4 Currency Swap Arrangements with Central Banks and Monetary Authority

a) The Authority is a participant in the multilateral ASEAN Swap Arrangement (ASA) together with other ASEAN central banks and monetary authority to provide short-term foreign exchange liquidity support for member countries that may experience balance of payments difficulties. In October 2009, the ASA was renewed for an additional two years up to 16 November 2011.

b) The Authority and the Bank of Japan, acting as the agent for the Minister of Finance of Japan, renewed their bilateral currency swap agreement under the Chiang Mai Initiative on 8 November 2008 for another three years up to 7 November 2011. Under the agreement, the Authority can swap Singapore dollars for US dollars up to US$3,000 million ($3,782 million) while the Bank of Japan can swap Japanese Yen for up to US$1,000 million ($1,261 million).

c) The Authority is Singapore's Swap Providing / Requesting Party in the Chiang Mai Initiative Multilateralisation (CMIM) Agreement involving the ASEAN member states, China (including the Hong Kong Monetary Authority, China), Japan and Korea. The CMIM Agreement, effective from 24 March 2010, provides financial support through currency swap transactions totalling US$120 billion, to address balance of payment and short-term liquidity difficulties in the region, and supplements existing international financial arrangements. Under the Agreement, the Authority’s commitment and financial contribution is US$4,552 million ($5,738 million) and the Authority can swap Singapore dollars for US dollars up to 2.5 times Singapore’s financial contribution.

d) The Authority established a 3-year China-Singapore currency swap arrangement of CNY150 billion ($30 billion) with the People’s Bank of China on 23 July 2010, to promote bilateral trade and direct investment for the economic development of the two countries. This CNY/SGD swap facility allows the Authority to provide Chinese Yuan liquidity to financial institutions for trade purposes.

e) For the financial year ended 31 March 2011, there was no request and drawdown of any of the above currency swap arrangements.

82 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

21.5 Capital Expenditure Commitments

Capital expenditure not provided for in the consolidated financial statements is as follows:

in $ millions 2011 2010

Amount contracted for 3 2

21.6 Leases

a) Future minimum lease payments under non-cancellable operating leases are as follows:

in $ millions 2011 2010

Less than 1 year 1 1 1 to 5 years 2 2 More than 5 years 1 2

4 5

b) Future minimum lease rental receipts under non-cancellable operating leases are as follows:

in $ millions 2011 2010

Less than 1 year 6 6 1 to 5 years 8 11

14 17

22 FINANCIAL RISK MANAGEMENT

22.1 The Risk Committee, chaired by an independent Board member, assists the Board of Directors in providing oversight and guidance over the management of risks assumed by the Authority. This encompasses the management of financial risks inherent in the Authority’s investment portfolios, amongst other organisational risks faced by the Authority.

22.2 An independent risk management unit provides senior management and the Risk Committee with regular reports of the risk profiles of the Authority’s investments. These reports cover risk measurement and analysis of the Authority’s investment portfolios. The unit also formulates risk policies and controls, and performs independent compliance monitoring of the portfolios in accordance with the stipulated investment guidelines.

MAS ANNUAL REPORT 2010/2011 83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

22.3 Market Risk

a) Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices and includes currency, interest rate and other price risks.

i) Currency risk is the risk of loss on foreign assets and liabilities arising from changes in foreign exchange rates.

ii) Interest rate risk is the risk of loss arising from changes in market interest rates. The Authority manages interest rate risks by setting duration limits on its investments.

iii) Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

b) Market risk is managed through regular monitoring of the market risk exposure of the Authority’s investments, the diversification of the Authority’s investments across different markets and currencies, and the establishment of investment risk tolerance and controls at both the aggregate and individual portfolio levels.

22.4 Credit Risk

a) Credit risk is the risk of loss arising from a party’s failure to discharge an obligation under a financial contract and includes counterparty, custodian and issuer credit risks.

b) The Authority’s credit risks are managed by transacting with well-rated entities within assigned limits. Credit risks are also mitigated by diversifying credit exposures across counterparties, custodians and issuers and through collateral arrangements with counterparties whom the Authority has signed the International Swaps and Derivatives Association (ISDA) Credit Support Annex.

c) The Authority manages issuer credit risk by imposing minimum credit rating requirements on the investment of fixed income securities. Single issuer limits are placed to control the credit exposure to any one issuer and to mitigate the extent of loss resulting from a default.

22.5 Country Risk

The Authority is exposed to the country credit risk of the Authority’s foreign assets arising from political, economic and financial events in the country of investment. Country limits are established to control the Authority’s credit risk exposure to individual countries.

22.6 Liquidity Risk

Liquidity risk is the risk arising from the inability to sell a financial asset at close to its fair value at short notice due to inadequate market depth or market disruptions. The Authority manages liquidity risk by investing mostly in liquid financial instruments and markets, and imposing limits on investments to ensure sufficient diversification.

84 MAS ANNUAL REPORT 2010/2011 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

23 NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS

New or revised accounting standards and interpretations to accounting standards have been issued that are mandatory for accounting periods beginning on or after 1 January 2011. The Authority does not expect the following revised accounting standard that is applicable, to have a material impact on the Authority’s consolidated financial statements.

Amendments to FRS 24 Related Party Disclosures

The amendments exempt government-related entities from the requirement to disclose details of all transactions with the government and other government-related entities, except that the entity shall disclose the nature of the relationship and sufficient information to understand the effects of related party transactions on its financial statements. The revised FRS 24 also clarifies and simplifies the definition of a related party.

24 AUTHORISATION OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 March 2011 were authorised by the Board of Directors for issuance and signed by Chairman and Managing Director on 28 June 2011.

MAS ANNUAL REPORT 2010/2011 85

KEY ECONOMIC AND FINANCIAL STATISTICS KEY ECONOMIC AND FINANCIAL STATISTICS

2006 2007 2008 2009 2010

National Income Aggregates Gross Domestic Product At Current Market Prices (S$m) 230,922.8 267,253.5 267,9 51.9 266,659.2 303,652.2 Growth Rate (% change) 10.6 15.7 0.3 -0.5 13.9 At 2005 Market Prices (S$m) 226,932.9 246,845.5 250,516.1 248,587.0 284,560.7 Growth Rate (% change) 8.7 8.8 1.5 -0.8 14.5 Gross National Income At Current Market Prices (S$m) 222,567.3 258,654.5 256,203.5 260,239.9 292,431.0 Growth Rate (% change) 14.6 16.2 -0.9 1.6 12.4

Labour Force Unemployment Rate (%) 2.7 2.1 2.2 3.0 2.2 Productivity Growth (% change) 2.0 0.1 -7.5 -3.4 10.7 Changes in Employment ('000) 176.0 234.9 221.6 37.6 115.9 Average Monthly Earnings (% change) 3.2 6.2 5.4 -2.6 5.6 Unit Labour Cost (% change) 1.5 5.8 4.7 0.6 -2.7

Savings and Investment Gross National Savings (S$m) 105,885.5 129,372.4 120,000.2 121,058.0 139,804.2 As % of GNI 47.6 50.0 46.8 46.5 47.8 Gross Domestic Capital Formation (S$m) 48,568.5 56,311.8 80,924.0 70,289.4 72,373.4 As % of GNI 21.8 21.8 31.6 27.0 24.7

Balance of Payments (S$m) Goods Balance 66,991.1 70,501.9 39,390.5 42,457.6 63,596.3 Exports of Goods 435,865.1 456,804.9 485,038.5 397,132.1 487,972.1 Growth Rate (% change) 12.5 4.8 6.2 -18.1 22.9 Imports of Goods 368,874.0 386,303.0 445,648.0 354,674.5 424,375.8 Growth Rate (% change) 12.9 4.7 15.4 -20.4 19.7 Services and Other Balances -9,674.1 2,558.7 -314.3 8,311.0 3,834.5 Current Account Balance 57,317.0 73,060.6 39,076.2 50,768.6 67,4 3 0.8 As % of GNI 25.8 28.2 15.3 19.5 23.1 Capital and Financial Account Balance -27,612.8 -48,473.3 -19,708.1 -39,016.2 -9,458.0 Balancing Item -2,708.5 4,710.3 - 8 37.0 4,703.8 -492.3 Overall Balance 26,995.7 29,297.6 18,531.1 16,456.2 57,48 0.5 Official Foreign Reserves 208,991.8 234,545.6 250,346.0 263,955.4 288,954.1

Inflation (% change) Consumer Price Index 1.0 2.1 6.6 0.6 2.8 GDP Deflator 1.8 6.4 -1.2 0.3 -0.5

Monetary Aggregates (% change) M1 13.4 22.4 18.4 23.5 20.3 M2 19.4 13.4 12.0 11.3 8.6 M3 19.1 14.1 11.6 10.5 8.4

88 MAS ANNUAL REPORT 2010/2011 2006 2007 2008 2009 2010

Interest Rates (period average, % per annum) Prime Lending Rate 5.31 5.33 5.38 5.38 5.38 Banks' 3-month Fixed Deposit Rate 0.57 0.53 0.42 0.29 0.21 Banks' 3-month Domestic Interbank Rate 3.45 2.76 1.32 0.70 0.57 3-month US$ SIBOR 5.19 5.30 2.93 0.70 0.35

Exchange Rates (period average, S$ per) US Dollar 1.589 1.507 1.415 1.455 1.364 Pound Sterling 2.926 3.016 2.616 2.274 2.107 Euro 1.995 2.064 2.077 2.024 1.810 100 Japanese Yen 1.367 1.281 1.374 1.556 1.554 Malaysian Ringgit 0.433 0.438 0.425 0.413 0.423

Banking and Finance Commercial Banks' Assets/ Liabilities (S$m) 508,449.9 582,859.0 668,298.4 705,759.7 781,6 07.4 Growth Rate (% change) 19.6 14.6 14.7 5.6 10.7

Finance Companies' Assets/ Liabilities (S$m) 10,066.6 12,781.8 12,586.4 11,691.9 11,523.6 Growth Rate (% change) 6.6 27.0 -1.5 -7.1 -1.4

Merchant Banks' Assets/Liabilities (S$m) 78,029.3 89,070.2 72,602.3 76,354.4 89,760.3 Growth Rate (% change) 20.3 14.1 -18.5 5.2 17.6

Asian Currency Units' Assets/ Liabilities (US$m) 698,648.5 906,991.0 912,739.4 869,296.7 971,299.4 Growth Rate (% change) 14.3 29.8 0.6 -4.8 11.7

Insurance Life Insurers' Assets/Liabilities (S$m) 99,353.0 112,451.2 99,985.7 119,895.5 131,903.7 Growth Rate (% change) 11.7 13.2 -11.1 19.9 10.0

General Insurers' Assets/Liabilities (S$m) 14,069.4 16,326.2 15,062.0 15,905.8 17,4 3 3.3 Growth Rate (% change) 4.2 16.0 -7.7 5.6 9.6

CPF Excess of Contributions Over Withdrawals (S$m) 2,089.5 6,555.1 9,265.1 9,404.4 12,374.2

Domestic Capital Market Net Funds Raised in Domestic Capital Market (S$m) 40,795.0 75,474.2 42,859.4 56,566.5 61,221.5

MAS ANNUAL REPORT 2010/2011 89

STATISTICAL ANNEX

A. MONETARY STATISTICS A1. Money Supply 92 A2. Official Foreign Reserves 93 A3. Exchange Rates 94 A4. Domestic Interest Rates 95

B. FINANCIAL STRUCTURE B1. Number of Financial Institutions in Singapore 96

C. COMMERCIAL BANKS C1. Assets and Liabilities 98 C2. Loans and Advances by Industrial Classification 99 C3. Types of Loans and Advances to Non-Bank Customers 100 C4. Types of Deposits including S$NCDs 101 C5. Liquidity Position 102

D. FINANCE COMPANIES D1. Assets and Liabilities 103

E. MERCHANT BANKS E1. Consolidated Assets and Liabilities 104 E2. Assets and Liabilities of Domestic Unit Operations 105

F. INSURANCE INDUSTRY F1. Assets and Premiums 106

G. NON-BANK FINANCIAL INSTITUTIONS G1. Central Provident Fund Board 107

H. DOMESTIC CAPITAL MARKET H1. Net Funds Raised in the Domestic Capital Market 108

I. ASIAN DOLLAR MARKET I1. Assets and Liabilities 109 I2. Maturity Transformation by Asian Currency Units 110 2011 20.0 20.0 March 7,113.5 93,978.8 93,978.8 22,956.0 156,444.1 156,444.1 116,934.8 116,934.8 413,255.5 S$ Million 139,856.6 139,856.6 296,320.7 296,320.7 420,369.0 420,369.0 20.0 20.0 2010 7,013.2 90,166.0 22,299.5 136,171.8 410,091.4 112,465.5 290,612.7 154,420.9 154,420.9 403,078.2 - 2009 7,318.1 93,471.8 20,216.5 20,216.5 73,255.3 371,122.6 277,650.8 277,650.8 378,440.7 156,804.6 120,846.2 120,846.2 18.0 2008 8,976.4 18,9 97.4 75,703.8 56,706.4 257,707.3 333,411.1 155,121.9 102,567.4 342,387.5 65.7 2007 9,196.0 47,270.1 81,822.9 16,668.5 63,938.6 151,731.7 297,558.9 297,558.9 306,754.9 233,620.3 2006 220.8 6,379.3 6 8,287.0 52,242.6 36,957.9 36,957.9 15,284.7 210,127.2 141,619.4 268,749.1 262,369.8 262,369.8 2005 409.2 5,901.3 31,501.4 14,584.5 46,085.9 65,588.9 107,714.3 173,712.4 219,798.3 219,798.3 225,699.6 2004 515.0 5,204.8 44,162.3 13,694.0 68,940.4 30,468.3 30,468.3 93,360.2 212,182.7 212,182.7 162,815.6 206,977.9 206,977.9 2003 288.3 5,215.8 66,111.3 38,722.6 12,838.4 89,706.3 25,884.2 156,105.9 194,828.5 200,044.3 2002 225.6 8,507.3 81,597.5 23,467.9 12,360.3 62,656.8 35,828.2 144,479.9 188,815.4 180,308.1 1 MONETARY STATISTICS : MONEY SUPPLY STATISTICS MONETARY other deposits other active circulation active S$NCDs finance companiesfinance Savings and Savings Fixed deposits Fixed Demand deposits Demand Currency in Net deposits with deposits Net A1. Figures exclude commemorative, numismatic and bullion coins issued by the Monetary Authority of Singapore and cash held by commercial banks and other financial institutions. The Board of of Board The institutions. financial other and banks commercial by held cash and Singapore of Authority Monetary the by issued coins bullion and numismatic commemorative, exclude Figures 2002. October in Singapore of Authority Monetary the with merged Singapore, Currency, of Commissioners

End of Period Quasi-money Money Supply (M1) Supply Money

Money Supply (M2) Supply Money

Money Supply (M3) Supply Money

1

92 MAS ANNUAL REPORT 2010/2011 2011 782.3 March 1,712.1 234,205.1 292,738.9 295,233.3 S$ Million 2010 421.0 1,969.8 225,754.2 288,954.1 286,563.3 2009 375.5 2,205.3 187,8 0 9.1 261,374.6 263,955.4 2008 544.1 255.8 174,196.3 249,546.1 250,346.0 2007 128.6 503.9 1 233,913.1 162,956.8 234,545.6 2006 487.5 200.1 208,991.8 136,260.9 208,304.2 2005 477.2 291.2 116,172.6 192,813.0 192,044.6 2004 474.8 712.4 112,574.9 182,276.8 183,464.0 2003 352.1 956.2 96,244.1 161,745.2 163,053.5 2002 825.0 305.8 82,218.7 142,621.1 141,490.3 MONETARY STATISTICS : OFFICIAL FOREIGN RESERVES STATISTICS MONETARY Rights (SDRs) Rights Exchange in the IMF A2. (US$ million) (US$ Special Drawing Special Gold & Foreign Reserve Position With effect from May 1999, the book value of foreign reserve assets are translated at market exchange rates prevailing at the end of each reporting month. Total Foreign Reserves Foreign Total End of Period

Total Foreign Reserves Foreign Total 1

MAS ANNUAL REPORT 2010/2011 93 2011 0.1142 0.1641 1.7465 0.4193 0.0418 1.5524 0.0144 2.0470 1.2780 1.2836 1.3569 4.3626 1st Qtr 2010 0.1180 2.1073 0.1755 1.2524 0.0150 1.5543 0.4234 1.3635 1.3089 1.8095 4.3292 0.0430 S$ Per Foreign Currency 2009 1.1473 0.1143 0.1876 0.4126 0.0140 2.0242 2.2737 1.3407 0.0424 1.5562 1.4545 4.4023 2008 0.1817 1.4148 0.0147 4.4874 1.2016 0.4247 0.1306 2.0771 2.6162 1.3738 0.0424 1.3090 2007 0.1622 0.1932 1.5071 3.0161 1.2624 0.0165 1.2563 4.5870 1.2806 0.4384 2.0638 0.0436

2006 1.1967 0.0173 0.1664 0.0419 2.9261 1.9952 1.3667 4.8870 0.4331 1.5889 1.2684 0.2045 2005 5.1768 0.1625 1.5138 2.0719 0.0172 0.0414 0.2140 1.6646 1.2686 1.3383 0.4395 3.0290 2004 0.1477 0.2170 2.1008 0.0189 1.2443 1.5634 0.0420 1.6903 1.3609 0.4448 5.0584 3.0963 2003 1.7422 1.1355 0.1463 1.9703 1.2957 1.5044 0.0420 0.2237 2.8467 0.0203 0.4585 5.0639 2002 1.1528 0.4712 5.1801 0.1435 0.0416 0.0193 0.9737 1.7906 1.4309 1.6909 2.6885 0.2296 MONETARY STATISTICS : EXC H ANGE RATES STATISTICS MONETARY A3. Period Average Period Dollar US 100 Indonesian Rupiah Indonesian 100 Australian DollarAustralian Ringgit Malaysian 100 Korean100 Won Dollar Kong H ong Thai Baht Thai Swiss Franc Swiss Pound Sterling Pound New100 Dollar Taiwan 100 Japanese100 Yen Euro Note: Currencies quoted are those frequently requested from the Authority.

94 MAS ANNUAL REPORT 2010/2011 0.17 0.12 0.18 0.24 0.31 0.31 0.52 0.25 0.46 0.43 0.44 0.26 0.26 5.38 2011 1st Qtr 0.14 0.21 0.57 0.27 0.52 0.25 0.48 0.28 0.54 0.22 0.35 0.38 5.38 0.30 2010 Per Cent Per Annum 1.13 0.18 0.70 0.70 0.37 0.62 0.25 0.45 0.56 0.29 0.33 0.29 5.38 0.34 2009 1.15 0.73 1.32 0.42 0.49 2.69 2.93 0.59 0.26 0.23 0.54 5.38 3.05 0.90 2008 2.76 1.57 0.75 1.09 2.66 0.25 5.26 5.26 0.64 0.53 0.33 5.33 0.85 5.30 2007 5.19 5.10 1.85 1.39 5.31 0.67 0.57 5.28 3.40 3.45 0.94 0.26 0.34 0.88 2006 2.17 0.76 1.25 3.77 0.24 2.22 0.32 0.44 0.66 0.55 3.56 0.83 5.30 3.38 2005 1.79 0.71 0.51 1.62 1.02 1.50 0.31 0.48 0.40 0.69 0.94 0.23 0.99 5.30 2004 0.75 1.21 0.73 1.23 1.22 5.31 0.67 0.52 0.28 0.68 0.99 0.50 0.36 0.88 2003 1.14 1.19 1.77 1.42 1.39 1.89 1.80 0.87 0.87 0.69 0.56 0.98 0.95 5.34 2002 2 3 MONETARY STATISTICS : DOMESTIC INTEREST RATES STATISTICS MONETARY 1 A4. Average leading of 10 banks. Average of all finance companies. Closing offer rates quoted by money brokers. 12-month Rate Deposit Savings Period Average Period Interbank Rate Rate Interbank Prime Lending Rate Lending Prime Rate Deposit Fixed 3-month 6-month 1-month Banks 3-month Fixed Deposit Rate Deposit Fixed 3-month 6-month 12-month Companies Finance US$ SIBORUS$ 1-month Savings Deposit Rate Deposit Savings 6-month 3-month 1 2 3 Note: Interest rates for banks (except for Prime Lending Rate) and finance companies referto average of end of month rates.

MAS ANNUAL REPORT 2010/2011 95 6 6 3 47 28 26 50 46 38 63 64 60 117 114 (39) 157 120 163 (428) 2011 7 6 3 42 25 26 46 62 45 46 63 64 117 113 120 158 162 (39) (421) 2010 6 6 3 41 27 27 62 49 40 50 66 63 112* 114 161* 158 108 (39) (409)* 2009 6 5 3 41 47 24 42 25 59 62 49 65 111 113 151 107 158 (39) (408) 2008 5 5 3 24 61 27 62 49 36 43 48 60 154 153 108 103 106 (39) (399) 2007 5 5 3 47 24 56* 28 45 34 63 48 60 151 149* 104 108 103 (39) (397) 2006 5 0 3 47 47 24 61 28 57 35 55 48 111 140 153 106 106 (39) (396) 2005 5 0 3 51* 51 61 55* 37 32* 23 50 50 (39) 115 110 110 138* 160 (398) 2004 4 5 5 0 5 31 52* 52 59 57 22 36 53 56* (59) 117 112 144* 112 164 (404) 2003 6 0 7 49* 59 42* 22 33 54 55 53* 90 (65) 114 115 120 144 169 (444) 2002 2 FINANCIAL STRUCTURE : NUMBER OF INSTITUTIONS IN SINGAPORE 1 Offshore banks head offices and main offices) Full banks Full Wholesale banks banks Wholesale including head offices) head including B1. (Banking offices(Banking including Direct insurers Authorised reinsurers Authorised Professional reinsurers Professional Merchant banks Merchant Captive insurers Captive (Finance companies' offices companies' (Finance Asian Currency Units Currency Asian Banks End-March Banks

Local Local

Foreign Finance Companies Finance

Brokers Insurance

Banks Merchant Insurance Companies Insurance

96 MAS ANNUAL REPORT 2010/2011 - 18 19 47 10 67 22 40 33 48 34 34 98 118 251 2011 - 7 17 19 71 10 39 48 40 34 30 99 30 107 224 2010 - 1 19 16 10 37 73 40 50 36 38 36 90 113 221 2009 - - 18 16 10 37 46 38 93 35 45 45 69 110 215 2008 - - 14 15 10 31 97 67 77 40 34 36 43 43 183 2007 - - - 9 13 16 31 72 42 61 42 92 33 38 171 2006 - - - 11 15 10 91 27 56 45 34 45 65 30 168 2005 - - - 8 13 10 31 26 26 52 49 49 94 60 163 2004 - - - 8 11 51 51 13 26 59 22 49 36 90 166 2003 ------8 79 55 55 39 167 224 2002 6 8 11 7 9 10 Securities Financing Securities Services Securities for Custodial Providing Real Estate Investment Management Trust Leveraged Foreign Exchange Trading Exchange Foreign Leveraged Trading in Futures Contracts Advising on Corporate Finance Corporate on Advising Fund Management Dealing in Securities Merchant banks Merchant Revised Local banks comprise 5 full banks and 1 wholesale bank. Previously known as restricted banks. Figure includes companies 11 on run-off and 1 company under scheme of transfer. run-off. on companies 20 includes Figure The figure includes 26 direct life brokers. The regulation of direct life brokers was transferredforce onfrom 1 October the repealed 2002. Insurance Intermediaries Actto the Financial Advisers Act (FAA)In viewwhen of changes FAAthe came in theinto licensing framework with the promulgation of the Securities and Futurescomparable. Act (SFA) and the FAA on 1 October 2002, the data before and after 1 October 2002 are not directly The figures priorto 2003 show the number of dealers licensed under the Securities IndustryThe figures Act (SIA), priorwhichto 2003was repealed show the number on 1 October of futures 2002. brokers and futures trading advisers licensedThe figures under prior the to Futures 2003Trading show the Actnumber (FTA), which of investmentwas repealed advisers on 1 October licensed 2002. under the SIA and theRegulation number of futures of real estatepool investmentoperators licensed trust management under the cameFTA. into effect on 1 August 2008. Regulation of trust companies came under the purview of MAS when the Trust Companies Act came into effect on 1 February 2006.

End-March Representative OfficesRepresentative

Banks

Licensed Trust Companies International Money Brokers Money International Capital Markets Services Licensees Licensees Services Markets Capital Licensed Financial Advisers Financial Licensed

1 2 3 4 5 6 7 8 9 10 11 *

MAS ANNUAL REPORT 2010/2011 97 0.0 20.0 2011 March 1,913.1 2,026.6 62,8 87.4 12,672.8 56,579.1 97,8 3 4.0 78,786.6 16,893.0 24,235.2 23,248.0 83,064.7 20,094.0 80,803.7 85,043.0 66,446.6 115,734.5 796,128.2 128,385.1 224,738.7 108,291.0 444,814.6 184,986.4 343,394.7 S$ Million 0.0 20.0 2010 2,219.9 1,096.3 85,147.4 69,152.1 78,411.4 14,189.7 77,972.8 62,441.7 15,878.7 22,672.8 55,024.4 95,726.8 20,050.4 22,555.2 84,853.4 781,6 07.4 107,526.2 433,757.8 119,350.8 322,743.8 130,081.3 232,272.3 188,564.9 0.0 0.0 2009 2,024.6 1,030.5 17,419.2 87,215.1 83,179.0 11,308.5 14,044.4 81,436.8 24,225.6 14,004.5 48,948.1 82,894.3 54,956.4 58,640.0 56,345.3 98,856.0 175,481.1 391,397.5 112,488.6 123,081.5 705,759.7 281,269.7 226,739.4 0.0 18.0 2008 904.0 1,739.8 9,489.7 18,130.1 65,112.3 51,315.7 52,572.1 73,134.5 98,715.0 84,148.2 92,313.0 73,808.1 13,466.0 66,696.1 91,383.2 13,889.0 18,283.9 84,826.2 3 47,507.4 272,175.4 217,0 8 9.8 184,405.1 668,298.4 0.0 65.7 2007 1,772.9 1,254.3 9,530.4 9,035.2 17,225.7 52,427.8 18,415.3 59,924.1 41,436.9 95,8 67.3 59,934.1 51,389.2 91,943.8 13,594.3 78,349.4 75,958.8 59,595.5 58,945.9 314,985.8 165,520.8 194,828.8 582,859.0 233,393.9 98.2 2006 319.0 998.3 6,160.2 1,665.4 8,802.0 47,748.1 67,707.6 39,017.4 12,919.4 63,476.1 49,184.3 8 0,627.0 51,554.4 19,879.9 50,738.3 38,670.5 16,969.3 78,840.4 68,958.7 194,597.6 272,462.6 146,468.4 183,989.2 508,449.9 2005 267.6 676.7 620.8 7,46 6.1 1,349.4 5,308.1 9,602.3 38,161.7 41,196.2 51,023.1 43,477.9 67,8 42.2 23,010.9 16,876.3 43,750.4 60,626.7 70,228.9 29,296.0 29,996.0 39,004.2 183,109.4 120,849.1 223,718.0 425,222.5 133,505.2 2004 521.1 815.5 300.5 6,775.0 1,400.7 5,544.8 8,040.8 71,774.1 15,119.3 18,815.1 6 8,217.7 60,176.8 38,241.4 32,615.8 45,0 57.5 39,837.2 28,598.1 24,364.5 42,998.9 35,933.0 113,856.1 114,953.7 206,176.3 179,088.6 398,236.7 2003 163.7 452.0 578.2 1,210.2 6,592.0 5,884.7 3,889.2 63,191.4 21,357.0 15,201.7 25,165.9 12,692.7 32,724.5 97,549.3 64,133.2 21,436.6 58,248.5 39,856.0 45,555.8 30,983.3 36,336.3 171,443.5 194,231.5 103,559.0 362,528.4 34.1 2002 606.1 259.8 1,176.1 3,0 47.7 5,619.7 6,462.8 37,501.7 61,777.0 41,871.2 61,537.8 17,434.6 13,297.0 42,621.2 18,218.6 25,813.3 96,807.5 55,918.2 35,489.8 26,064.5 30,560.9 353,115.0 180,138.4 161,283.4 106,060.1 COMMERCIAL BANKS : ASSETS AND LIABILITIES Others Government securities Government C1. In Singapore In Outside Singapore Outside Outside Singapore Outside In Singapore In Outside Singapore Outside In Singapore In bank customers bank financing bills which of End of Period Assets Cash in hand Balances with MAS with Balances S$NCDs held S$NCDs Amounts due from banks

ACUs Investments ACUs liabilities Other

Fixed and other assets Liabilities Paid-up capital and reserves customers non-bank of Deposits issued S$NCDs Amounts due banks to Assets/Liabilities Total Loans and advances non- to Bills payable Bills

98 MAS ANNUAL REPORT 2010/2011 2011 470.4 March 9,375.9 41,137.7 27,8 8 5.7 13,381.9 43,218.8 55,938.3 35,330.8 116,685.0 343,394.7 S$ Million 2010 382.2 9,018.1 10,917.6 42,419.4 37,9 92.5 25,0 87.2 30,982.9 53,593.9 112,350.2 322,743.8 2009 260.3 10,612.1 10,547.3 24,207.8 91,408.7 32,465.4 39,469.0 48,940.6 23,358.8 281,269.7 2008 283.2 9,211.7 11,786.1 37,872.3 79,587.0 24,861.6 33,506.1 25,060.6 50,006.6 272,175.4 2007 232.1 9,129.8 73,139.1 14,458.1 37,50 8.9 31,360.4 10,225.8 35,070.9 22,269.0 233,393.9 2006 325.9 6,297.1 11,237.9 32,318.3 63,345.1 20,059.0 10,863.2 26,345.5 23,805.6 194,597.6 2005 293.0 4,327.0 9,035.3 23,031.1 10,108.0 21,993.1 61,954.6 32,482.3 19,885.2 183,109.4 2004 212.5 9,796.9 9,083.9 3,956.8 58,8 87.1 22,136.9 32,571.8 18,893.8 23,548.8 179,088.6

2003 305.5 4,133.8 8,948.8 52,155.4 16,857.3 32,783.9 21,633.8 24,029.5 10,595.5 171,443.5

2002 162.1 9,717.3 4,554.7 27,729.5 16,8 87.2 10,819.2 44,623.6 22,926.8 23,863.0 161,283.4 LOANS AND ADVANCES BY INDUSTRIAL CLASSIFICATION COMMERCIAL BANKS : LOANS AND ADVANCES C2. communication ousing and bridging loans bridging and ousing Manufacturing construction and Building End of Period Agriculture, mining and quarrying and mining Agriculture, General commerce General H Transport, storage and Professional and private individuals private and Professional Non-bank financial institutions financial Non-bank Total Others

MAS ANNUAL REPORT 2010/2011 99 2011 March 5,595.1 5,595.1 9,099.9 24,235.1 24,235.1 S$ Million 304,464.7 343,394.7 343,394.7 2010 5,374.6 5,374.6 8,918.7 20,050.4 20,050.4 322,743.8 322,743.8 288,400.2 2009 4,874.3 4,874.3 9,965.5 11,308.5 255,121.3 281,269.7 281,269.7 2008 9,489.7 6,504.0 10,264.5 272,175.4 245,917.2 2007 6,431.8 9,035.2 10,437.2 207,489.8 207,489.8 233,393.9 233,393.9 2006 5,407.2 6,160.2 10,781.5 194,597.6 194,597.6 172,248.7 2005 5,308.1 5,095.7 11,790.0 183,109.4 160,915.6 160,915.6

2004 4,649.5 5,544.8 13,562.9 155,331.4 179,088.6 2003 3,889.2 3,995.2 16,829.1 16,829.1 171,443.5 146,730.0

2002 4,179.1 3,0 47.7 20,001.1 20,001.1 161,283.4 134,055.6 TYPES OF LOANS AND ADVANCES TO NON-BANK CUSTOMERS COMMERCIAL BANKS : TYPES OF LOANS AND ADVANCES C3. End of Period Overdrafts discounting Bills Trust receipts loansTerm and others Total

100 MAS ANNUAL REPORT 2010/2011 20.0 2011 March 1,113.4 187,687.0 150,429.9 105,584.4 444,834.6 S$ Million 20.0 2010 996.3 433,777.8 146,802.5 185,564.8 100,394.2 0.0 2009 881.3 81,0 47.5 391,397.5 129,815.4 179,653.3 18.0 2008 726.6 62,100.4 3 47,525.4 175,646.9 109,033.5 65.7 2007 988.5 52,080.2 86,496.0 175,421.2 315,051.6 2006 220.8 1,060.3 41,473.1 71,760.9 158,168.3 272,683.4 2005 775.4 409.2 35,140.1 69,306.2 224,127.2 118,496.4 2004 515.0 633.0 32,775.4 72,938.3 99,829.5 206,691.2

2003 738.8 288.3 27,9 02.2 69,861.3 95,729.2 194,519.8

2002 225.6 390.4 25,178.1 87,879.2 66,690.8 180,364.1 COMMERCIAL BANKS : TYPES OF DEPOSITS INCLUDING S$NCDS C4. End of Period Total Demand Savings S$NCDs (net) S$NCDs Others Fixed

MAS ANNUAL REPORT 2010/2011 101 17.1 2011 1st Qtr 40,110.8 74,805.4 34,694.6 4 37,567.1 S$ Million 17.2 2010 31,135.4 71,212.6 40,077.2 40,077.2 413,312.8 413,312.8 18.6 2009 72,9 87.6 36,623.6 36,363.9 36,363.9 392,473.2 392,473.2 19.1 2008 65,787.4 36,279.1 29,508.3 29,508.3 343,846.6 22.5 2007 51,699.6 13,388.6 65,088.2 289,744.0 289,744.0 22.1 2006 10,616.9 53,597.5 53,597.5 42,980.6 242,434.1 242,434.1 24.4 2005 14,651.5 38,238.1 38,238.1 52,889.6 216,346.6 25.8 2004 16,248.8 36,091.2 52,340.0 202,741.5 202,741.5 26.0 2003 9,746.5 50,375.9 40,629.4 193,473.1 25.2 2002 7,876.0 46,845.5 38,969.5 185,568.9 COMMERCIAL BANKS : LIQUIDITY POSITION (a) Minimum Requirement Minimum (a) Actual(b) Total Liquid Assets (c) Free(c) Liquid Assets (b) - (a) C5. Period Average Period Liabilities Base Liabilities Liquid Assets Liquid Liquidity Ratios

102 MAS ANNUAL REPORT 2010/2011 8.7 0.0 0.0 71.0 98.8 2011 217.5 616.8 260.4 March 1,874.1 1,874.1 4,741.0 8,217.2 1,232.4 1,962.8 1,486.6 1,989.6 8,720.2 8,989.3 11,639.9 S$ Million 0.0 0.0 10.2 79.6 2010 215.1 106.0 626.4 266.6 8,614.6 8,891.4 1,259.3 1,485.5 1,926.2 1,885.0 1,885.0 4,502.8 2,069.9 8,058.2 11,523.6 0.0 0.0 11.7 97.5 2009 116.8 220.1 238.2 658.5 9,111.0 8,861.1 1,824.9 1,453.7 2,361.3 1,226.4 1,809.4 1,809.4 8,092.0 4,504.3 11,691.9 0.0 0.0 13.6 2008 274.8 162.4 123.0 134.9 762.8 988.5 988.5 9,743.1 1,713.0 1,587.6 9,975.7 9,799.7 2,755.6 1,456.9 5,399.9 12,586.4 7.7 0.0 0.0 2007 167.9 274.9 881.7 881.7 140.0 754.5 256.9 1,767.1 2,713.1 1,277.7 1,683.3 5,699.4 9,939.5 10,179.7 12,781.8 10,0 87.2 0.0 0.0 6.0 757.1 757.1 2006 203.1 619.5 126.2 108.9 603.7 7,150.3 7,972.2 1,681.3 1,693.1 7,0 35.3 4,045.1 2,245.8 1,008.0 10,066.6 0.0 0.0 3.5 2005 187.6 121.6 827.3 455.1 455.1 735.7 105.3 685.4 2,467.6 7,8 6 9.7 3,818.7 1,658.4 6,240.4 1,583.3 9,444.9 6,365.5 7.7 7.4 0.0 98.9 2004 321.3 145.8 876.8 952.4 160.5 709.4 460.7 453.3 5,514.1 5,667.6 3,561.7 1,442.8 6,878.9 2,364.8 8,308.5 7.1 0.0 0.0 90.6 2003 119.9 6 87.4 312.3 149.7 312.3 155.3 756.3 846.4 7,9 02.7 3,441.9 6,657.2 5,373.4 2,459.0 1,406.3 5,530.2 0.0 0.3 21.1 2002 192.0 252.8 222.6 254.9 2,111.2 1,115.8 1,547.9 9,612.0 1,345.7 1,345.7 9,855.7 1,500.5 4,034.4 5,233.3 10,815.9 13,722.3 FINANCE COMPANIES : ASSETS AND LIABILITIES FINANCE COMPANIES ousing loans ousing Other institutions Banks Lease finance Lease Others Savings Fixed Others financial institutions financial D1.

h purchase h ire advances and Loans

Total Assets/Liabilities Total Securities and equities and Securities Liabilities Capital and reserves Deposits with banks and other other and banks with Deposits Borrowings Other assets Deposits Other liabilities Other End of Period Assets Reserves with MAS

MAS ANNUAL REPORT 2010/2011 103 2011 March 6,281.7 9,725.6 7,9 55.8 2,545.4 3,248.2 3,248.2 27,101.8 91,705.5 20,416.8 21,069.6 49,706.3 35,359.7 35,359.7 52,954.6 22,962.2 S$ Million 2010 3,101.8 7,73 6.8 9,510.2 2,254.7 5,079.2 21,249.1 48,162.4 36,100.0 51,264.3 25,976.8 89,760.3 20,349.6 22,604.2 2009 5,711.0 6,091.7 1,488.4 8,855.7 3,265.6 23,451.1 22,327.0 37,9 6 3.7 34,698.1 23,824.0 24,484.6 76,354.4 20,838.6 2008 530.7 5,571.5 5,679.7 1,262.2 8,443.2 35,167.3 13,182.7 21,754.6 22,781.3 35,698.1 30,831.3 72,602.3 32,093.5 1 2007 660.5 9,164.4 1,463.7 3,579.3 6,523.2 28,157.1 21,072.0 35,014.8 35,601.3 36,261.8 36,478.5 89,070.2 36,904.2 2006 771.4 2,133.9 8,104.5 5,231.8 1,635.2 31,911.8 27,562.0 34,198.8 15,650.2 78,029.3 28,859.0 32,683.2 35,834.0 2005 904.5 665.3 2,412.7 8,374.1 3,962.7 11,209.1 28,567.1 29,471.5 26,675.0 64,845.1 24,548.3 23,036.8 23,883.0 2004 7,6 3 6.0 1,225.9 2,842.0 1,394.9 3,882.4 11,991.1 25,718.7 27,320.4 20,406.1 24,323.8 59,244.8 18,693.0 26,094.5

2003 724.3 1,481.6 2,459.1 1,573.0 8,232.6 10,109.9 18,207.0 22,291.5 24,229.0 29,304.7 28,580.4 20,809.9 58,203.4

2002 501.3 891.2 7,742.7 9,511.3 1,221.6 2,233.1 17,729.8 19,674.8 24,357.4 22,156.6 21,265.4 24,858.7 52,564.3 2 2 CONSOLIDATED ASSETS AND LIABILITIES MERCHANT BANKS : CONSOLIDATED In Singapore In Outside Singapore Singapore Outside Outside Singapore Singapore Outside In Singapore In to non-bank customers non-bank to E1. Data are derived from the consolidation of merchant banks’ domestic and Asian dollar operations. dollar Asian and domestic banks’ merchant of consolidation the from derived are Data Units. Currency Asian Including Other assets

Securities and equities and Securities Liabilities Capital and reserves Amounts due banks to

Borrowings from non-bank customers non-bank from Borrowings

Loans and advances advances and Loans Other liabilities Other Assets Amounts due from banks End of Period Total Asets/Liabilities Total

1 2

104 MAS ANNUAL REPORT 2010/2011 2011 403.1 366.0 March 1,718.1 1,017.2 3,751.7 6,495.1 1,989.6 6,092.0 2,835.6 2,545.2 2,545.2 6,488.5 3,943.3 12,330.9 S$ Million 2010 601.1 360.9 649.2 1,917.8 1,051.1 3,024.9 2,254.6 3,632.0 3,564.6 5,804.6 6,453.8 5,886.6 11,430.4 11,430.4 1 2009 713.9 318.2 769.0 845.6 3,0 67.1 3,138.4 4,040.1 1,488.4 6,039.7 1,340.2 5,528.5 4,699.5 10,210.2 2008 781.7 527.9 341.6 3,119.9 1,221.1 3,6 47.8 1,261.8 5,323.1 1,469.6 4,061.2 8,795.5 1,543.2 3,262.9 2007 521.9 659.6 1,126.1 1,170.7 3,727.8 1,138.5 1,641.2 2,745.3 4,387.4 8,337.8 1,449.3 2,495.3 3,944.6 715.1 2006 397.2 770.6 365.5 643.8 7,379.6 2,133.6 2,601.5 1,864.0 1,635.2 4,236.7 3,632.6 4,403.2 2005 237.8 463.7 299.8 904.5 664.2 685.2 1,137.6 6,157.3 1,937.9 2,613.4 2,842.4 4,034.7 3,370.5 2004 745.1 831.0 326.9 464.0 435.8 688.4 6,731.0 1,470.8 3,577.6 2,301.8 4,970.6 1,393.0 3,529.3

2003 724.0 273.0 350.7 459.0 768.2 446.0 7,377.5 1,0 47.5 1,771.5 1,479.4 4,700.9 5,985.7 4,506.3

2002 501.1 477.3 219.0 881.9 809.0 336.5 386.3 4517.2 1,028.7 6,769.7 1,529.8 4,382.4 5,264.3 2 2 MERCHANT BANKS : ASSETS AND LIABILITIES OF DOMESTIC UNIT OPERATIONS Outside Singapore Singapore Outside In Singapore In In Singapore In Outside Singapore Singapore Outside E2. to non-bank customers non-bank to Corporate financial advisory services, underwriting activities and operations in the gold market are not reflected in the data. the in reflected not are market gold the in operations and activities advisory services, underwriting financial Corporate Units. Currency Asian Including Securities and equities and Securities Loans and advances advances and Loans Other assets Liabilities Capital and reserves

Total Assets/Liabilities Total Amounts due banks to End of Period Assets Amounts due from banks Other liabilities Other Borrowings from non-bank customers non-bank from Borrowings

1 1 2

MAS ANNUAL REPORT 2010/2011 105 39.6 N.A. 2011 959.7 636.5 March 1,923.8 1,440.6 2,400.3 11,294.7 12,481.5 152,365.8 139,884.3 S$ Million 2010 152.2 7,276.7 2,479.7 3,012.6 3,234.4 5,349.5 8,583.9 11,375.3 10,827.6 149,337.0 136,029.7 2009 189.4 9,719.1 6,501.6 7,436.2 1,840.7 4,495.4 9,950.4 2,265.9 2,940.8 135,801.3 123,585.0 2008 554.2 8,347.5 1,459.2 1,904.6 2,962.5 6,829.3 8,655.2 8,038.2 3,866.8 115,0 47.7 10 4,487.9 2007 402.9 1,121.9 7,9 6 0.1 1,957.3 9,031.7 6,105.4 2,621.9 7,6 6 0.8 3,483.5 128,777.4 118,860.0 2006 377.4 868.8 7,181.5 1,739.3 5,481.3 6,975.8 6,622.5 2,385.9 3,095.4 113,422.4 105,060.6 2005 263.1 982.9 6,070.0 2,346.7 5,330.7 2,984.0 2,033.8 5,354.3 6,839.8 94,324.6 102,428.4 2004 237.7 549.8 2,151.3 2,751.3 1,527.3 6,077.0 5,202.7 4,902.6 5,869.6 79,822.9 86,552.9 2003 231.6 499.8 5,547.9 4,6 97.4 4,613.4 2,652.0 1,385.2 2,344.2 4,996.2 71,323.8 77,406.4 2002 602.6 686.7 890.5 5,417.9 4,361.4 4,756.4 2,525.5 2,230.9 5,948.3 61,537.0 66,789.0 1 INSURANCE INDUSTRY : ASSETS AND PREMIUMS INSURANCE INDUSTRY Annuity Life InsuranceLife Single Premium Policies Premium Single Annual Premium Policies Premium Annual Captive Insurers Captive Direct Insurers Professional Reinsurers Professional Domestic Business Domestic Offshore Business Industry Period) (End F1. Figures for Marchdoes not 2011 include general captives and marine mutual insurers.

New Business Premiums Business New Life Business: Premiums Business: Life Premiums in Force (End Period)

General Business: Gross Premiums Premiums Gross Business: General Total General Business General Total

Total AssetsTotal of Insurance 1 available Not N.A:

106 MAS ANNUAL REPORT 2010/2011 676.9 336.9 -267.2 1st qtr 2,477.0 1,814.0 6,877.9 1,730.4 2011 ** 6,214.0 1,880.9 4,400.9 192,102.9 185,285.5 S$ million 2010 537.8 4,852.7 1,645.4 6,709.8 6,978.9 2,628.9 9,664.8 12,374.2 18,765.9 22,039.0 176,142.0 185,888.0

2009 846.0 1,476.4 2,622.9 6,276.3 9,404.4 6,092.6 5,836.5 10,781.8 20,186.2 15,408.0 157,4 46.7 166,804.0

2008 5,8 47.0 5,651.4 1,078.8 5,455.1 9,265.1 2,799.8 1,302.9 14,167.3 11,028.5 20,293.6 151,3 07.1 141,325.5

2007 1,076.7 4,432.1 5,8 67.9 3,081.0 6,555.1 1,604.3 4,228.0 17,874.2 18,185.0 11,629.9 128,626.5 136,586.9 2006 996.3 4,114.7 1,574.4 2,078.3 3,028.0 2,089.5 3,926.8 8,355.0 16,547.1 14,457.6 118,918.0 125,803.8

2005 903.5 1,158.7 7,3 6 4.3 3,844.1 3,675.4 2,440.3 4,238.3 16,105.1 10,091.7 11,866.8 119,787.5 115,362.2 2004 791.8 779.7 6,517.0 2,272.6 3,375.3 4,959.0 3,523.5 11,624.5 10,361.1 15,320.1 111,873.8 108,462.4

2003 722.0 7,130.1 3,115.3 1,851.7 4,001.7 2,384.8 3,260.5 6,909.8 11,868.3 15,870.0 100,750.4 103,539.6 2002 763.2 2,897.3 1,304.1 8,208.1 2,026.8 3,054.9 3,820.2 3,863.5 16,165.7 14,861.6 94,444.1 96,422.6

1

ousing and Residential Properties Schemes. Properties Residential and ousing 4

5 3 2 NON-BANK FINANCIAL INSTITUTIONS : CENTRAL PROVIDENT FUND BOARD ousing schemes include Public H Public include schemes ousing G1. Securities (End Period) with MAS (During Period) MAS with Medical Schemes Members’ Balances (During Period) (During Balances Members’ Under Section 15 from Investments (During Period) Section of the 15 CPF Act allows withdrawals be to made on any of the following grounds: a) member having reachedd) unsound the age 55 years; mind; leaving e) death; b) and f) Singapore Malaysian and West citizen Malaysia; (leaving c) physical Singapore). incapacity; Medical Schemes include Medisave, MediShield, Private Medical Insurance and ElderShieldDeposits placed Schemes. with MAS during the year excluding: a) interest on bonds & interest on Advance DepositsExcludes retained advance as deposits deposits by MAS;with and MAS. conversion b) and redemption of Government Bonds. Provisional Includes refunds and transfers Reserve to Account. ousing Schemes Schemes H ousing Approved Over Withdrawals (During Period) Withdrawals Over Holdings of Government Government of Holdings Advanced Deposits Advanced

Others Interest Credited to Credited Interest Members’ Balances (End Period) (End Balances Members’

Interest EarningsInterest Withdrawals * Excess Of Contributions Of Excess Members’ Contributions Members’ 2 3 4 5 ** Source: Central Provident Fund Board * 1 h

MAS ANNUAL REPORT 2010/2011 107 2011 911.4 975.6 420.0 6,117.4 7,371.0 6,737.4 1st Qtr 3,130.0 9,335.1 2,402.0 5,532.0 6,278.9 9,258.0 21,527.4 15,814.0 S$ Million 2010 665.0 2,143.4 8,0 87.7 6,744.4 3,785.7 17,79 3.0 20,194.4 61,221.5 22,6 67.4 12,673.4 18,402.4 25,880.7 36,589.0 60,383.4 2009 6,816.6 4,026.8 3,209.9 8,503.9 -1,271.0 17,121.3 17,216.2 21,180.0 41,201.3 15,164.2 24,452.8 16,793.2 15,320.5 56,566.5 2008 935.4 500.0 9,839.0 5,538.6 3,365.0 8,804.0 6,690.3 17,526.1 13,526.1 38,0 97.7 21,898.7 12,699.0 15,494.3 42,859.4 2007 1,415.0 8,134.7 7,8 0 5.9 9,708.4 6,709.6 75,474.2 17,9 40.2 22,837.3 21,022.5 12,046.5 16,222.3 29,986.7 22,650.2 35,930.9 2006 1,317.8 7,761.3 2,761.0 1,275.0 8,422.0 3,555.8 3,200.2 -1,374.8 17,3 32.7 11,840.1 19,946.1 25,754.7 40,795.0 13,090.3 2005 700.0 7,6 56.1 1,979.7 5,074.5 6,916.8 6,899.8 2,783.5 11,680.0 44,746.4 13,056.1 16,700.0 20,010.3 14,935.8 28,299.8 2004 933.9 500.0 1,110.6 7,712.2 5,9 87.2 8,315.8 3,942.7 6,399.5 21,237.1 42,190.1 31,102.2 17,240.0 14,8 37.6 14,965.8 2003 420.0 345.3 7,16 5.6 8,139.9 4,014.6 1,622.9 2,046.4 6,306.3 11,661.2 14,524.4 18,949.8 34,625.6 10,809.9 24,906.3 2002 724.8 535.0 7,737.9 7,014.9 1,427.8 1,685.4 3,838.0 15,136.8 13,216.7 28,887.5 14,033.8 10,296.7 18,034.6 22,433.8 2 3 1 E DOMESTIC CAPITAL MARKET MARKET : NET FUNDS RAISED IN T H E DOMESTIC CAPITAL DOMESTIC CAPITAL and loan stocks boards’ securities boards’ Redemption of accumulated from Conversion Rights issues Private placements of listed shares Listed bonds, debentures Public issues of shares Gross issue of Government Net issues of statutory sector private the New advance deposits by Government by Less: Unlisted bonds H1. 2) 3) Issues of debt securities 1) 1) 1) securities 3) New capital raised by 2) Net funds raised Government securities securities Government deposits advance 2) Government securities excluding treasury bills. treasury excluding securities Government (SGX). Exchange Singapore the on listed bonds dollar-denominated Singapore This includes bonds that are not listed on the SGX but listed on other exchanges. C

B Total netTotal funds raised (A+B+C)

A

1 1 2 3

108 MAS ANNUAL REPORT 2010/2011 2011 March 1,271.2 2,806.5 91,712.6 48,285.1 48,391.9 84,462.4 475,497.8 379,105.7 286,172.3 519,210.3 112,845.6 284,282.8 205,305.4 608,245.2 1,010,069.6 US$ Million 2010 1,111.3 1,780.4 53,762.1 53,812.3 92,720.6 79,206.4 111,320.5 451,199.5 501,891.4 971,299.4 268,081.7 200,215.0 584,218.2 273,980.3 355,408.7 2009 1,187.7 1,416.2 42,163.1 8 0,157.2 87,259.2 41,886.0 96,395.0 269,171.7 373,168.6 338,150.6 502,313.8 219,599.5 460,470.9 188,038.7 869,296.7 2008 1,052.5 1,593.9 64,140.5 54,620.3 54,848.7 62,600.9 262,162.1 214,381.9 912,739.4 125,292.9 198,635.4 379,908.9 406,240.9 523,690.5 498,669.6 2007 3,652.1 2,520.4 87,39 3.7 53,670.1 53,610.7 50,438.6 66,398.3 197,823.1 173,972.9 532,674.6 412,665.5 275,256.9 906,991.0 436,579.6 540,688.3 2006 4,733.1 5,790.8 67,219.2 42,971.6 49,139.6 51,409.5 43,628.2 317,76 6.8 216,818.1 119,335.2 139,499.6 409,878.0 434,022.9 338,985.2 698,648.5 2005 3,367.2 2,952.4 37,337.3 51,510.2 29,102.0 97,6 59.5 29,067.8 40,766.4 327,675.4 319,616.7 389,485.1 611,377.4 611,377.4 162,834.2 120,865.5 394,080.5

2004 3,187.4 2,679.4 34,771.1 31,457.9 31,428.3 43,932.1 99,578.7 48,628.9 93,494.2 313,671.1 309,941.8 150,354.2 379,900.0 385,302.2 581,562.5 2003 2,167.2 1,690.3 37,151.2 81,458.1 34,243.1 29,401.4 39,428.6 83,602.8 29,360.2 137,116.0 341,917.7 330,911.0 267,266.5 275,406.3 509,145.9

2002 1,500.9 3,059.6 31,415.4 28,369.1 31,394.8 34,063.1 77,906.3 65,672.8 35,599.0 261,132.8 482,612.3 126,151.6 335,973.7 320,896.7 268,959.3 ASIAN DOLLAR MARKET : ASSETS AND LIABILITIES I1. Outside Singapore Outside In Singapore In Outside Singapore Outside In Singapore In Liabilities customers non-bank of Deposits

Interbank funds Interbank NCDs issued NCDs Inter-ACU Other assets Other liabilities Other Assets/Liabilities Total End of Period held NCDs Assets customers non-bank to Loans Inter-ACU Interbank funds Interbank

MAS ANNUAL REPORT 2010/2011 109 79.3 28.4 34.6 40.6 63.0 63.0 46.2 2011 831.4 125.5 103.6 646.8 -184.6 March US$ Billion 67.2 25.7 28.7 34.7 42.8 79.6 54.4 2010 101.9 621.7 122.4 800.3 -178.6 27.1 24.6 73.0 60.7 32.8 43.0 85.3 15.9 2009 561.5 722.3 105.8 -160.8 30.1 52.4 34.0 30.7 83.4 50.8 80.9 21.7 117.4 2008 570.3 739.4 -169.1 71.7 27.0 24.9 28.3 55.3 46.8 83.9 33.8 117.7 2007 765.9 603.3 -162.6 87.2 29.1 61.6 21.5 19.1 25.6 25.3 44.4 50.6 2006 479.2 583.7 -104.5 41.4 37.8 27.3 22.1 15.7 21.2 25.7 59.9 48.5 517.0 2005 -89.5 427.5 27.2 20.1 13.4 19.9 48.7 23.4 40.6 28.8 43.5 -74.1 2004 415.5 489.6 37.0 10.1 24.9 22.9 59.9 35.0 20.8 39.2 18.4 2003 -80.3 375.1 455.4 5.9 17.8 41.8 16.1 18.9 26.7 32.6 59.6 35.0 2002 -84.6 355.4 440.0 1 MATURITY TRANSFORMATION BY ASIAN CURRENCY UNITS TRANSFORMATION ASIAN DOLLAR MARKET : MATURITY 1 1 From 2004 onwards, data exclude those claims or liabilities with unallocated maturity periods. Therefore the sum of all the maturity categories for claims may not be equal to the sum of all the maturity maturity the all of sum the to equal be not may claims for categories maturity the all of sum the Therefore periods. maturity unallocated with liabilities or claims those exclude data onwards, 2004 From liabilities. for categories I2.

Over 3 years Liabilities Over 3 years 1 to Over 6 months 1 year to End of Period Up 6 months to Up 6 months to Up 6 months to Over 6 months 1 year to Over 3 years 1 to Over 3 years Net Position Position Net Over 6 months 1 year to Over 3 years 1 to Over 3 years Claims Claims 1

110 MAS ANNUAL REPORT 2010/2011 GLOSSARY

MAS ANNUAL REPORT 2010/2011 111 GLOSSARY

ABS Association of Banks in Singapore EMV Europay, MasterCard and VISA ACMF ASEAN Capital Markets Forum ERF Enhanced Repo Facility AEC ASEAN Economic Community FATF Financial Action Task Force AIRM ASEAN Insurance FDSP Financial District Regulators’ Meeting Security Programme AML/CFT Anti-Money Laundering and FICS Financial Industry Counter Terrorism-Financing Competency Standards AMRO ASEAN+3 Macroeconomic FSB Financial Stability Board Research Office FX Foreign Exchange APG Asia/Pacific Group on G20 Group of Twenty Money Laundering G3 Group of Three ASEAN Association of Southeast Asian Nations GDP Gross Domestic Product ASEAN+3 ASEAN plus China, Japan, IA Insurance Act South Korea IAIS International Association of AUM Assets Under Management Insurance Supervisors BCBS Basel Committee on Banking IBF Institute of Banking and Finance Supervision ICBG Inter-Central Bank Games BCM Business Continuity Management ICBS International Conference of BIS Bank for International Settlements Banking Supervisors CACS Client Advisor ICRM Institute of Catastrophe Competency Standards Risk Management CBCA Cross-Border Collateral ICT Information and Communication Arrangement Technology CECA Comprehensive Economic IFCOE Infrastructure Finance Centre Co-operation Agreement of Excellence CIS Collective Investment Schemes IMF International Monetary Fund CMIM Chiang Mai Initiative IMFC International Monetary and Multilateralisation Financial Committee CPF Central Provident Fund INSEAD Institut Européen d'Administration des Affaires CPI Consumer Price Index IOSCO International Organisation of CPSS Committee on Payment and Securities Commissions Settlement Systems ITF IOSCO's Implementation DI Deposit Insurance Task Force DI-PPF Deposit Insurance and Policy LTV Loan-to-value Owners' Protection Schemes MASRC MAS Recreation Club EC European Commission MBFC Marina Bay Financial Centre EDHEC Ecole De Hautes Etudes Commerciales du Nord MENA Middle East/North Africa EMEAP Executives’ Meeting of East-Asia MEPS+ MAS Electronic Payment System Pacific Central Banks

112 MAS ANNUAL REPORT 2010/2011 GLOSSARY

MIGA Multilateral Investment SMX Singapore Mercantile Exchange Guarantee Agency SWIFT Society for Worldwide Interbank MMoU IAIS Multilateral Memorandum Financial Telecommunication of Understanding WGFM EMEAP Working Group on MoU Memorandum of Understanding Financial Markets MRF MAS Repo Facility YOG Youth Olympic Games MSCI Morgan Stanley Capital YPP Young Professionals Programme International NUS National University of Singapore NUS-RMI National University of Singapore- Risk Management Institute OTC Over-the-counter PB Private Banking PBC People's Bank of China PD Primary Dealer PHS Product Highlights Sheet PLP People Leadership Programme PPF Policy Owners' Protection PPP Public Private Partnership QFII Qualified Foreign Institutional Investor q-o-q SAAR Quarter-on-Quarter Seasonally Adjusted Annualised Rate REIT Real Estate Investment Trust RNF Representative Notification Framework S$ Singapore Dollar S$NEER S$ Nominal Effective Exchange Rate SAA MAS Service Appreciation Award SCE Singapore Cooperation Enterprise SDIC Singapore Deposit Insurance Corporation SFA Securities and Futures Act SGS Singapore Government Securities SGX Singapore Exchange SICOM Singapore Commodity Exchange Ltd SMU Singapore Management University

MAS ANNUAL REPORT 2010/2011 113 THANK YOU The MAS Annual Report 2010/2011 working committee would like to thank the following colleagues for their invaluable contributions:

• Jaya do Chakarapany, Currency Department • Chen Dan Meng, External Department • Issac Chen, Insurance Department • Chua Kit Theng, Monetary and Domestic Markets Management Department • Cecil Goh, Internal Audit Department • Cheryl Ho, Macroeconomic Surveillance Department • Geraldine Koh, Economic Surveillance and Forecasting Department • Koh Tsin Zhen, Economic Surveillance and Forecasting Department • Kwan Lai Heng, Corporate Services Department • Nelson Liu, Information Technology Department • Loh Yin Shan, Monetary and Domestic Markets Management Department • Benjamin Ma, Strategic Planning Office • Florence Mok, Financial Centre Development Department • Francis Ng, Insurance Department • Ngoh Eng Eng, MAS Academy • Alvin Ong, Reserve Management Department • Ong Peck Wan, Human Resource Department • Poon Siok Kheng, Finance Department • Alan Tan, Risk Management Department • Tan Beng Chun, Specialist Risk Department • Tan Shi Min, Strategic Planning Office • Tan Tze Leng, Banking Department • Joevin Teo, Reserve Management Department • Justin Teo, Prudential Policy Department • Yap Sock Hui, Capital Markets Intermediaries Department

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